Apples 30% Cut on AI Innovation Costs OpenAI Millions

Apples 30% Cut on AI Innovation Costs OpenAI Millions

Apple quietly profits from OpenAI’s ChatGPT app through its 30% cut on all new subscriptions made through iOS, despite not standing at the forefront of generative AI, significantly bolstering Apple’s service revenue.

The Artificial Intelligence (AI) revolution is in full swing, with OpenAI’s ChatGPT application dazzling the crowd. On the other hand, amidst the cheers and applause, a familiar tech giant quietly rakes in the profits. Although while Apple may not stand at the forefront of generative Artificial Intelligence (AI), it still has a way to take a sizeable bite of the Artificial Intelligence (AI) pie.

OpenAI’s deal shifted into high gear with the unveiling of an iPhone application for ChatGPT, which swiftly catapulted to the top of the App Store charts. Within days, the application claimed the title of number one in the free applications category, an accomplishment further highlighted by Apple’s endorsement as a “must-have” application under its “Essentials” category.

Enter Apple’s infamous 30 percent cut, known between tech insiders as the “Apple Tax,” on all new subscriptions made through iOS. The fee has drawn a fair share of criticism, especially from cryptocurrency users for whom in- application Non-Fungible Token (NFT) purchases would become an expensive affair. Still, OpenAI chose to abide by Apple’s terms, opting for its native in- application purchasing system instead of setting up a separate subscription website.

This implies that for every ChatGPT Plus subscription, Apple takes $6 of the $20 paid monthly by iOS users.

Tim Cook, Apple’s CEO, has voiced his commitment to integrating Artificial Intelligence (AI) into Apple’s products. Still this does not mean a shift away from the pursuit of profit. Even as data privacy concerns bubble under the surface, ChatGPT remains available on the App Store, significantly bolstering Apple’s service revenue, which reached a record $20.8 billion in the most up-to-date quarter.

Apple’s 30 percent fee, on the other hand, has landed the company in hot water. The United States federal appeals court ruled that Apple breached California’s Unfair Competition Law by forbidding alternative payment methods. Regardless of this, OpenAI seems to be sticking with Apple’s built-in payment processor, likely favoring its seamless user experience.

As informed by Decrypt, Apple recently resurfaced victorious in an antitrust case filed by Epic Games, but it’s now on the verge of permitting third party application stores in the European Union owing to new legislation aimed at leveling the field for developers.

As this narrative unfolds, it underscores the intricate dance betwixt Artificial Intelligence (AI) pioneers, big tech, and regulatory authorities. For now, Apple appears to have the upper hand, leveraging the innovative work of others to line its own pockets, even while being tangled in controversies. 

1 thing’s for sure: the Artificial Intelligence (AI) revolution is just getting started, and so is the scramble to capitalize on it.


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