Apple recently filed a trade secret lawsuit against OpenAI. It accused OpenAI of a pattern of misconduct aimed at getting current and former Apple employees to share confidential information. (In response, OpenAI said it was “aware of no evidence that this complaint has merit.”)
In the latest episode of TechCrunch’s Equity podcast, Kirsten Korosec, Sean O’Kane and I discussed whether this lawsuit will cast a shadow over OpenAI’s much-discussed plans to get into the hardware business (starting with mobile smart speakers) and go public.
“Even setting aside whether the court would grant any kind of injunctive relief or injunction against the work that OpenAI is doing, it could naturally lead to a situation where there is some delay in the work that OpenAI is doing,” Sean suggested. “I’m sure that’s probably part of the reason Apple does this. They don’t do this casually.”
With all these plans at stake, will OpenAI try to solve this problem as quickly as possible? Or has the recent court victory over Elon Musk taught us that we can withstand the costs and embarrassment of a trial? At least Kirsten predicted the latter.
Continue reading for a preview of our conversation, edited for length and clarity.
Kirsten Korosek: Sean, what do you think about Sam Altman having a little device in his pocket listening to you?
Sean O’Kane: I’m okay. Maybe it’s predictable, but I like it. no. thank you
I’m sure we’ll get into that, but this is reportedly the first product that OpenAI has been working on in the hardware sector with Jony Ive and company. They’ve been really coy since they put out a weird video last year where they were sitting in a coffee shop or bar in San Francisco talking very vaguely about hardware and legacy devices, namely laptops and cell phones. So if this is the direction they are heading, then all power to those who want to have someone like that always listen to them. This doesn’t suit me.
Anthony Ha: One of the things we need to remember about these kinds of devices is that, depending on how mobile it is, it doesn’t just listen to you, it also listens to people around you. I might be okay. I’m not okay, but let’s say I’m okay. But if we meet in person at Disrupt, we might all suddenly be heard.
When these things become widespread, there are all kinds of social norms that need to be renegotiated. I think we should ridicule and criticize people who record others without their consent.
Kirsten: Well, I’m just going to touch on a device that’s been speculated for a really long time and we’ll see what it actually turns out to be once it’s officially introduced. But this is important in the context of the lawsuit Apple filed last Friday.
That was definitely the biggest news this week and this is the trade secret lawsuit. There are some pretty wild claims here, and it should be very emphasized that these are the claims Apple made in its complaint. But what’s accusing OpenAI is a pattern of misconduct at the highest level, specifically targeting OpenAI employees who worked at Apple. In fact, they named Chief Hardware Officer Tang Tan in this lawsuit.
All of this is important because Apple is accusing OpenAI of essentially stealing its trade secrets. But in that context it could be used in competing hardware products. We may not know whether this suit has merit since we haven’t gone through full discovery, but other than the fact that wow, this is going to be fun, what are your first impressions of the suit?
Sean: Two things. First, this is a potentially very big risk to everything OpenAI works on. Even setting aside whether the court would grant some kind of injunctive relief or some kind of injunction against what OpenAI is doing, this could naturally lead to a situation where OpenAI causes some delays in its ongoing work, and I’m sure that’s probably part of the reason Apple is doing this. They don’t do this casually.
The other thing is that I think we know that OpenAI filed for an IPO confidentially. If Sam Altman’s cautious comments about the IPO are to be believed, I think it could happen as early as the end of this year or early next year. And this raises a lot of questions about it. Because on the one hand, I think their business right now is probably overwhelmingly software. They don’t currently include any hardware business in the picture.
They will soon be out in the market telling bankers and investors where they think the market should be. If they’re locking in huge sums of money on a potential hardware division and hardware product, that could be a huge risk and could change a lot of the calculus for how IPOs are priced. So that’s where my head is at.
Anthony: One claim that I think Apple probably has some pretty solid numbers for is that there are currently over 400 Apple employees working on OpenAI. Of course, both companies are very large, with thousands or tens of thousands of employees. So in percentage terms it’s not necessarily big. But that seems like a pretty serious brain drain with a lot of people.
And another thing I’m curious about is related to Sean’s argument. In the context of a potential IPO, how much damage has it ultimately suffered from a marketing and brand perspective from the trials OpenAI has already been through? Basically, it seemed like I won, but the testimony brought up a lot of dirty laundry that wasn’t that scary, but was a bit embarrassing. To what extent do they think, “We don’t want to go through that again”? Or did you learn the lesson, “Hey, we’ve been through that and we survived, so it’ll be okay to try again with Apple.”
Kirsten: By the way, I completely predict the latter.
If you purchase through links in our articles, we may receive a small commission. This does not affect our editorial independence.
