“Apple to ‘Pay’ OpenAI for ChatGPT Through Distribution, Not Cash”, Mark Gurman2024-06-12 (AI economics, OA)⁠:

When Apple Inc. Chief Executive Officer Tim Cook and his top deputies this week unveiled a landmark arrangement with OpenAI to integrate ChatGPT into the iPhone, iPad and Mac, they were mum on the financial terms.

Left unanswered on Monday: which company is paying the other as part of a tight collaboration that has potentially lasting monetary benefits for both. But, according to people briefed on the matter, the partnership isn’t expected to generate meaningful revenue for either party—at least at the outset.

The arrangement includes weaving ChatGPT, a digital assistant that responds in plain terms to information requests, into Apple’s Siri and new writing tools. Apple isn’t paying OpenAI as part of the partnership, said the people, who asked not to be identified because the deal terms are private. Instead, Apple believes pushing OpenAI’s brand and technology to hundreds of millions of its devices is of equal or greater value than monetary payments, these people said.

[Much of the value of the deal to OA is simply establishing a major relationship with Apple, which constitutes a credible alternative to Microsoft as OA’s major investor & hardware-implementer—Apple has the cash to set up massive datacenters and pay for R&D, even if Apple is still second-best to MS.]

Meanwhile, Apple, thanks to OpenAI, gets the benefit of offering an advanced chatbot to consumers—potentially enticing users to spend more time on devices or even splash out on upgrades.

[commoditize your complement] …Apple’s deal with OpenAI isn’t exclusive, and the iPhone maker is already discussing offering Google’s Gemini chatbot as an additional option. That agreement should be in place later this year. Apple has also held talks with Anthropic as a potential chatbot partner, people familiar with the matter told Bloomberg earlier this year. The idea is to ultimately offer a range of AI services to users—similar to the way Apple has different search engine options in its Safari browser. Eventually, Apple aims to make money from AI by striking revenue-sharing agreements whereby it gets a cut from AI partners that monetize results in chatbots on Apple platforms, according to the people. The company believes that AI could chip away at the billions of dollars it gets from its Google search deal because users will favor chatbots and other tools over search engines. Apple will need to craft new arrangements that make up for the shortfall. [ie. commoditize your complement—Apple sees the endgame as like when Apple Maps replaced the stopgap of Google Maps]