At first glance, Apple Inc. might appear as something other than a heavyweight contender in the emerging generative artificial intelligence (AI) field. Still, the tech titan’s influence and strategic positioning have positioned it to secure considerable profit from the AI boom. The recent surge of OpenAI’s ChatGPT app on the App Store and the ensuing financial implications serve as a testament to this phenomenon.
Just days after its debut on the platform, ChatGPT soared to the top of the free apps chart and was subsequently championed by Apple as an “Essential” app. This rise to stardom has had an interesting financial ripple effect on Apple. Leveraging the embedded subscription model, OpenAI’s ChatGPT Plus accrues $20 per month from iOS users. As a result, Apple, thanks to its infamous 30% commission or the so-called “Apple Tax,” secures $6 from every subscription.
The widespread enthusiasm surrounding the ChatGPT app has turned it into a profitable venture for Apple, swelling its service revenue to a record $20.8 billion in the last quarter alone. Simultaneously, the “Apple Tax” is stirring controversy among stakeholders, particularly those in the crypto realm, where NFT purchases are becoming more costly due to the 30% cut.
The balance of profit and privacy
The saga of Apple and OpenAI is about more than just revenues and profit margins. At the heart of it are broader questions concerning technology monopoly, data privacy, and evolving regulations. Despite being accused of not contributing much to public AI research, Apple’s well-established market presence and powerful ecosystem position it to monetize breakthroughs in the field.
In a scenario where ChatGPT Plus gains 5 million iOS subscribers, Apple accounts for approximately $360 million annually from OpenAI’s brainchild alone. This sum is substantial, considering Apple’s recent emphasis on incorporating AI into its products while being “deliberate and thoughtful.”
However, this move has not been devoid of reservations. The Wall Street Journal recently reported that Apple had instructed employees to limit their usage of ChatGPT over concerns of confidential data collection. This measure, though, hasn’t inhibited Apple from offering the service to general users through the App Store, indicating a balancing act between capitalizing on AI’s potential and upholding user privacy.
Caught amid controversies and lawsuits
Apple’s supremacy in the tech world has been challenged by recent legal scrutiny, notably, the Epic Games’ antitrust case and rulings regarding alternative payment methods. Although Apple emerged victorious against Epic Games, new legislation in the European Union could soon allow third-party app stores, a decision aimed at ensuring fair play for developers.
In the unfolding narrative of AI and big tech, Apple, albeit caught amid controversies, maintains its grip, mastering the art of profiting from the innovation of others. As the AI revolution continues to gather momentum, the tech giant’s role and resulting fortunes promise to be a fascinating watch.
