Limitless: An AI Podcast

Apple has filed a lawsuit against OpenAI over alleged trade secret theft related to future hardware plans and employee recruiting. 

With OpenAI’s reported device ambitions and Apple’s leak-detection practices, the broader competition for talent and proprietary information in AI has reached a boiling point.

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TIMESTAMPS

0:00 OpenAI’s Secret Apple Grab
4:16 Poaching Engineers and Secrets
6:35 The Alleged Interview Scheme
9:06 Why Apple Fought Back
11:40 OpenAI Versus Apple Strategy
13:49 Apple’s Leak-Tracking Tactics
15:33 AI Hardware Meets Personal Data
17:34 Apple’s Own Security Problem
19:59 Why IP Is the New Gold
22:26 California’s Non-Compete Advantage
23:08 Is Apple Truly Worried?
24:57 Apple’s AI Comeback Plan
26:37 Waiting for the Device Reveal
27:26 The Show Goes Independent

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RESOURCES

Josh: https://x.com/JoshKale

Ejaaz: https://x.com/cryptopunk7213

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Not financial or tax advice. See our investment disclosures here:
https://www.bankless.com/disclosures⁠

Josh works with Anthropic as a contractor. All views expressed are his own and do not represent Anthropic, its leadership, or its affiliates. Nothing in this episode is investment advice.

Creators and Guests

Host
Ejaaz Ahamadeen
Host
Josh Kale

What is Limitless: An AI Podcast?

Exploring the frontiers of Technology and AI

Josh:
Did OpenAI just steal the most critical secret hardware supply chain magic that

Josh:
Apple has been working on for the last couple of decades?

Josh:
The answer is probably yes, and it came in the form of this leaked text message

Josh:
saying, LOL, I found out I can access the network storage so funny from an Apple

Josh:
engineer who went over to OpenAI.

Josh:
Now, this Apple engineer, his name is Chang Liu, and he had a company MacBook

Josh:
that he kept after he left.

Josh:
And he found later on there was an authentication bug that left his access alive

Josh:
even while he was at open ai so he took this

Josh:
stolen laptop and downloaded over a thousand pages of confidential material

Josh:
covering a ton of unreleased products engineering presentations

Josh:
and technical specs on unreleased apple hardware products now who's the best

Josh:
hardware product maker in the world for consumers it's apple and now open ai

Josh:
has this treasure trove of information that they have been using to build allegedly

Josh:
been using to build their new hardware device that we're tremendously excited about.

Josh:
So there is a lot of chaos going on in this story.

Josh:
But right now, the story is Apple is suing OpenAI, and they have a lot of ammo to back this thing up.

Ejaaz:
And all of this comes off the back of OpenAI releasing GPT 5.6 this week.

Ejaaz:
So they had so many ups and so many downs. But yeah, Friday,

Ejaaz:
10th of July, they got slapped with a lawsuit from none other than Apple claiming

Ejaaz:
that they've stolen a bunch of trade secrets specifically around how they build

Ejaaz:
the future AI hardware devices.

Ejaaz:
And as we know, OpenAI has been working on quite a few of these devices rumored

Ejaaz:
to be going online around February 2027. They acquired Johnny Ives Startup.io.

Ejaaz:
Johnny Ives famously one of the chief product designers at Apple for around

Ejaaz:
six and a half billion dollars.

Ejaaz:
So it's a big deal for Apple to make this claim.

Ejaaz:
Now, imagine you are interviewing for a new job at OpenAI.

Ejaaz:
Before going into your interview, they ask you to bring a piece of hardware

Ejaaz:
from your current company, that being Apple, to show and tell during your interview

Ejaaz:
to show how the circuitry design works to show how the engineering design completely works.

Ejaaz:
In your interview itself. That's exactly what a 24-year veteran from Apple,

Ejaaz:
ex-veteran, VP of design, he

Ejaaz:
designed the iPhone, he designed the iWatch called Tang Yu did at Apple.

Ejaaz:
He is officially OpenAI's chief hardware design officer, and he's responsible

Ejaaz:
for launching their future AI devices. There's another guy that you mentioned

Ejaaz:
earlier, Josh, called Chang Liu.

Ejaaz:
He's an eight-year electrical engineer from Apple who also left and happened

Ejaaz:
to have a laptop which still had access to Apple's file system.

Ejaaz:
So he stole a bunch of blueprints.

Ejaaz:
This basically reads like some kind of dramatic movie. I've got social network

Ejaaz:
playing in my head, like from the meta kind of vibes, but this is a crazy lawsuit, if true,

Ejaaz:
If it does end up getting taken to the end of this case where there's a judgment

Ejaaz:
placed on open ai this could defer the launch of their ai hardware devices by as much as a year

Josh:
It's pretty serious and if you scroll down just a tiny bit we'll see the three

Josh:
people named or i should say the two people that you just mentioned and one missing name

Josh:
now we have tang we have chang which sounds like a joke that these are the two

Josh:
people at the core of this lawsuit but there is a third person who is notably

Josh:
not names and it's Johnny Ive and his company

Josh:
Love From or I guess specifically IO here who already had a lawsuit filed against

Josh:
them for totally different reasons.

Josh:
So if you remember this image on screen when they made their big announcement

Josh:
that OpenAI was acquiring Johnny Ive's company IO for I think it was like four

Josh:
or five billion dollars.

Josh:
They made this really nice announcement video. They published this blog post

Josh:
about it and then immediately within the week

Josh:
they got sued by another company named io and now they have to actually change

Josh:
their name so that's a totally separate lawsuit but notably johnny is not named

Josh:
at all in this apple lawsuit and you have to ask the question why well i think

Josh:
one of those is like could you imagine apple

Josh:
suing johnny that would be the most diabolical headline ever but perhaps the

Josh:
reality is is that they actually didn't have a whole lot to do with this and

Josh:
that a lot of the kind of ownership of this problem comes directly from the

Josh:
open ai team and these two people because from the sounds of it,

Josh:
the OpenAI team was very much aware of what was going on.

Josh:
In fact, they were building and actively poaching,

Josh:
up to 400 people from Apple's design, engineering, and their production teams

Josh:
to help them build this new AI hardware infrastructure system.

Ejaaz:
It's important to note that California, where all these companies reside,

Ejaaz:
don't actually have a non-compete law.

Ejaaz:
So technically, you can leave one company on one day and join a competitor immediately

Ejaaz:
the next day, and there's no non-compete laws that can be enforced. So all of that is legal.

Ejaaz:
What is potentially illegal is what these employees exactly did.

Ejaaz:
So I want to just spend a moment kind of describing exactly what these executives

Ejaaz:
did, which is what has got OpenAI into such hot water.

Ejaaz:
So let's start with the 24-year Apple veteran. He was the VP of design.

Ejaaz:
So he was responsible, heavily responsible for designing what the iPhone looked like, how it worked.

Ejaaz:
And he did the same for the iWatch as well.

Ejaaz:
He's now OpenAI's chief hardware officer. He has assumed that role since January

Ejaaz:
of this year. So it's a pretty short term.

Ejaaz:
And what he's reportedly done is before leaving Apple,

Ejaaz:
he emailed himself a list of the suppliers that Apple has for their entire supply

Ejaaz:
chain so that he knew who to reach out to,

Ejaaz:
contacts and friendlies that he's made at those supplying companies so that

Ejaaz:
he could replicate basically the same thing at OpenAI.

Ejaaz:
Another thing he did is he reached out to a bunch of Apple employees immediately

Ejaaz:
after he assumed the new role and gave them the guide as to how to evade Apple's

Ejaaz:
restrictive policies around talking to competitors. Number three,

Ejaaz:
He asked them to come to interviews and, as I mentioned earlier,

Ejaaz:
bring a piece of hardware that they're designing to prove that,

Ejaaz:
number one, they're working on Apple hardware, and two, to show them,

Ejaaz:
you know, some of the secrets as to how to do this.

Ejaaz:
And then, number three, he basically, like, outlined the entire policy at OpenAI

Ejaaz:
as to why they could just kind of leave and join OpenAI.

Ejaaz:
So, the idea is he allegedly made this incredibly obvious that he's trying to

Ejaaz:
poach these specific types of hardware engineers, and I don't think that's just

Ejaaz:
good practice in general, and Apple's just coming for blood.

Ejaaz:
The second guy, Chang Liu, he kind of accidentally fell into this file case,

Ejaaz:
if accidental is kind of like a term I'm using kind of generously here.

Ejaaz:
He was an electrical engineer. He stole a laptop that was technically Apple's

Ejaaz:
property. He didn't return it.

Ejaaz:
And when he opened it on his first day at OpenAI, he realized that he still

Ejaaz:
had access to the filing system and even the chat system at Apple.

Ejaaz:
So he basically reached out and stole a bunch of files that were incredibly

Ejaaz:
proprietary. And that's who Apple's going after.

Josh:
Yeah, the allegations list is pretty long. You mentioned a couple here about

Josh:
the things that he was doing, but then there's another one, which is the homework pattern, they call it.

Josh:
And in one instance, an Apple employee screenshot it and downloaded files about

Josh:
this like highly confidential project prior to the interview with Tan.

Josh:
And then he asked about the project in the interview and Apple saw this and

Josh:
they're like, wait, this is like an established pattern is what they call it.

Josh:
Where candidates study confidential material before the interviews like it was

Josh:
an exam prep because 10 was so familiar with the internal workings at Apple.

Josh:
He already knew all of the insider projects, the things that weren't released,

Josh:
but he didn't know all of it.

Josh:
So what he did is he had these people come for interviews and he said,

Josh:
hey, I know you're working on this project. Tell me all about it. Explain it to me.

Josh:
And if you explain it well, you'll get a job here. And the reality is that they

Josh:
were just filling in the blanks on the places that he wasn't either up to date

Josh:
on or he didn't fully know.

Josh:
And this was this way of allegedly, at least this way of kind of filling the

Josh:
gaps in his knowledge base to fully understand what's going on at Apple so that

Josh:
they could emulate it then inside of OpenAI.

Josh:
A similar thing happened where he told people how they could offboard themselves

Josh:
in a way that was discreet and it could get them the most information out of Apple.

Josh:
He encouraged them to not say who the new employer was.

Josh:
Allowing them to get two additional weeks of access to the servers to continue

Josh:
to collect information and share it with their new employer and kind of reverse

Josh:
engineering the exit process at Apple to optimize it for leaked information going to open AI.

Josh:
So these allegations are pretty insane. This is like a lot of proprietary data.

Josh:
And when you're thinking about companies who you would want to steal trade secrets from.

Josh:
I don't think there's one better in the world than Apple, who has created exactly

Josh:
what OpenAI has been trying to make.

Josh:
And they've done it at a larger scale than just anyone else.

Josh:
So this is like a huge amount of allegations that if found guilty,

Josh:
you have to imagine it's going to cause some serious problems for their hardware

Josh:
team over there at OpenAI.

Ejaaz:
It also just seems so sloppy from these two executives at OpenAI.

Ejaaz:
The whole thing is a mess. Like, asking someone to literally email their personal

Ejaaz:
accounts is, like, so obviously out of practice when you're at a company that

Ejaaz:
has confidential information. Like, I don't know why you would even try to do

Ejaaz:
that, but obviously they thought they had some kind of advantage.

Ejaaz:
But I don't think they made any kind of attempt to kind of keep it discreet.

Ejaaz:
I mean, 400 employees from Apple have now moved over to OpenAI.

Ejaaz:
Predominantly, most of them are working on the hardware thing specifically. me.

Ejaaz:
Which brings me to the question, why is Apple going out of their way to file

Ejaaz:
a lawsuit to what is relatively basically just still a startup?

Ejaaz:
They don't have the cash balance. They don't have the profit margins that Apple has.

Ejaaz:
Why are they worried about this startup, OpenAI? It brings me to think that

Ejaaz:
They know OpenAI has built something quite effective.

Ejaaz:
Now, the rumor mill basically says that OpenAI has been working on

Ejaaz:
some kind of a screenless device, maybe a series of different devices that can

Ejaaz:
sit inanimately on your desk and listen to everything you say,

Ejaaz:
that can see things that you see, potentially maybe even an earbuds with a camera.

Ejaaz:
Now, if that sounds familiar, that's because a lot of the leaks from Apple themselves

Ejaaz:
is that they're releasing a suite of devices that are going to look and sound very similar to that.

Ejaaz:
And so I'm kind of piecing the the puzzle pieces together in my head right now, and I'm realizing,

Ejaaz:
Oh, maybe they did blatantly just copy the designs that Apple had,

Ejaaz:
and they're trying to beat them to the punch.

Ejaaz:
Now, Apple's timeline is they're supposedly meant to announce three new devices,

Ejaaz:
a bunch of AirPods that have cameras on it,

Ejaaz:
some kind of necklace pendant device that can either sit in your pocket or sit

Ejaaz:
around your neck, as well as a pair of smart glasses that can see everything you see.

Ejaaz:
They're looking to announce it by the end of the year, which I think is around

Ejaaz:
the time that OpenAI is planning to do theirs.

Ejaaz:
But OpenAI is planning to launch theirs officially. So start distributing them

Ejaaz:
by February of 2027. And they're aiming, according to Sam, for 100 million units.

Ejaaz:
So it got me thinking, this is probably one of the better marketing schemes

Ejaaz:
for OpenAI, even though it comes in the form of a lawsuit. It's just interesting to see.

Josh:
In the case, it doesn't completely derail their hardware efforts,

Josh:
which according to Mark Gurman, I was reading his tweets earlier,

Josh:
he is like the guy when it comes to Apple leaks.

Josh:
He's saying in the immediate aftermath of the lawsuit, OpenAI still believes

Josh:
that it's on track to release their first product early in 2027.

Josh:
That's the February release date, which is on track again with the kind of end

Josh:
of year announcement that we're planning to get in terms of what the product's

Josh:
going to look like, hopefully how much it's going to cost, kind of showing the usability of it.

Josh:
He says the problem most likely is that they will now have issues with their

Josh:
suite of products and any sort of iPhone competing device because of a lawsuit

Josh:
like this, depending on how it goes.

Josh:
So the hope is, is that we still get that OpenAI device version one,

Josh:
but the second version of that, the third version, the family of devices might

Josh:
find some complexities if it's found out that this is true and that OpenAI really

Josh:
is guilty in a lot of these things.

Josh:
And I have to think about Apple of today versus the Apple of maybe 15 years

Josh:
ago and how different they've handled these situations, because this has been

Josh:
going on for a while now, right?

Josh:
It's like, this has been happening since February, they found out about it,

Josh:
which is funny because there was a lot of people who went to WWDC and were talking to...

Josh:
The Apple executives about the OpenAI partnership. And it wasn't really very

Josh:
warm the way they were talking about it, but nobody knew why.

Josh:
And it's because they were aware of what was going on in the background,

Josh:
but they didn't actually do anything until so much later.

Josh:
And if you remember, there's a current partnership with OpenAI and Apple where

Josh:
Siri is serving a lot of queries to ChatGPT directly, which is crazy because,

Josh:
I mean, we have this leaked email on screen from Steve Jobs back from 2005,

Josh:
where they had a similar thing happen where Adobe started to hire a few engineers from Apple.

Josh:
And this was a big no-go for Steve because nobody tries to poach engineers from

Josh:
anybody's companies. They have to earn them through merit.

Josh:
And he says, Adobe is recruited from Apple. They have hired one person already

Josh:
and are calling lots more.

Josh:
And this was only one person. He said, I have a standing policy with our recruiters

Josh:
that we don't recruit from Adobe.

Josh:
It seems you have a different policy. One of us must change our policy. Please let us know who.

Josh:
That was one employee. Could you imagine 400 employees with trade secrets going

Josh:
to another company and what that would have looked like open ai would have been

Josh:
that contract would have been ripped apart the next day

Josh:
app iphones would not have been serving any queries and they would have been

Josh:
in an all-out war probably in the public within 24 hours.

Josh:
This has been going on for, what, close to six months now? And this is the difference

Josh:
in Apple. It's like Tim Cook is very much the peacetime CEO.

Josh:
He was great at building a business, great at building revenue,

Josh:
not much of a jerk. Apple hasn't really had a jerk in charge in a long time.

Josh:
And that's what I'm hopeful that John Ternus can start to do.

Josh:
Hopefully he is kind of maybe the one pushing this. We know John Ternus is very

Josh:
much in the hardware industry.

Josh:
He would be very close to this. In fact, he worked very close with,

Josh:
I think it was Tan, in terms of the guy actually wanting to take John Ternus' job.

Josh:
As that lead of hardware. He didn't get it, John Turnus found it being CEO,

Josh:
but he's very deeply involved and he understands this.

Josh:
And I have to imagine that's probably where the lawsuit came from,

Josh:
is Turnus kind of stepping into a CEO role and saying, no, I'm not going to stand for this.

Ejaaz:
And if you're wondering the measures or the extents that Apple goes to to try

Ejaaz:
and catch you leaking their information, we have a list over here.

Ejaaz:
So the tweet goes, they include invisible watermarks in documents and files,

Ejaaz:
subtle color changes for one pixel in an image, so they'll know if it's you

Ejaaz:
specifically that shared a specific artifact externally outside of the company.

Ejaaz:
So you can imagine that it ranges, it's individual for a particular employee.

Ejaaz:
Typeface, one letter in a memo italicized or different font size.

Ejaaz:
File name, slightly different identifiers for a file.

Ejaaz:
Basically, they run through this entire list to make sure that they can not

Ejaaz:
only know when someone's leaked information, but catch the specific individual responsible.

Ejaaz:
And I wonder if they made this same assessment when they figured out that Tang

Ejaaz:
Yu and Chang Liu were the ones that leaked all of this information.

Ejaaz:
Now, it's interesting, the point you made around, you know, John Ternus is assuming

Ejaaz:
the new CEO role in a couple of months now at Apple, and he is a hardware expert.

Ejaaz:
And Apple, I think, has realized over the last two years, as they've missed

Ejaaz:
the entire AI model race,

Ejaaz:
Their number one moat, aside from having the most consumer users for any kind

Ejaaz:
of tech company in history, is hardware.

Ejaaz:
It's one thing being able to have a really cool AI model. It's another thing

Ejaaz:
being able to distribute it effectively to billions of people all over the world.

Ejaaz:
It is something that the company Snap is trying to figure out.

Ejaaz:
It's something that OpenAI is trying to figure out. It's something that Google

Ejaaz:
is trying to figure out with Android and their mobile phone distribution.

Ejaaz:
But Apple has been the number one winner. It's the reason why they're like the number

Ejaaz:
two or three most valuable company in the world. And I think that Apple realizes

Ejaaz:
that OpenAI poses a significant threat if they're poaching not only 400 of their

Ejaaz:
employees, but all their trade secrets completely.

Ejaaz:
Now, if you're wondering how the software and the hardware component kind of

Ejaaz:
melds together, imagine you're talking to an AI model every single day on your

Ejaaz:
laptop, or it builds up this personal history of you.

Ejaaz:
You want it to travel wherever you go. You want it to eventually leave the computer

Ejaaz:
and see the things that you see and ingest the information that you see. Why?

Ejaaz:
Because the more information that you feed these AI models, the smarter and

Ejaaz:
more intelligent they become around you.

Ejaaz:
So imagine the best way to do this is I'll have it on my iPhone.

Ejaaz:
I mean, Josh, you probably interact with your AI agents or your AI models from

Ejaaz:
your phone pretty frequently.

Ejaaz:
I know I do it as well. I speak to it in voice mode. And I always wonder like,

Ejaaz:
I wonder if you could see what I see. I mean, I already do it.

Ejaaz:
I take pictures of different things and I send it to my chatbot and I'm like,

Ejaaz:
hey, can you explain this to me? Or like, this is what I'm looking at.

Ejaaz:
This is the information that you need. And it just reads it and ingests it.

Ejaaz:
It would be cool if it did it 24 seven or if you could hear the conversation

Ejaaz:
or the meeting that I was in.

Ejaaz:
And all these different software features, all these different kind of inputs

Ejaaz:
for all these various parts of data are kind of fracture at the moment.

Ejaaz:
But Apple is the number one company that can pull off an amazing hardware suite.

Ejaaz:
And so they know this and they see OpenAI stealing their stuff and they're like,

Ejaaz:
I'm not going to let you do this. So I kind of understand the extent and measures that they're taking.

Ejaaz:
And I hope John Ternus goes ham on this. I hope the lawsuit yields something quite interesting.

Ejaaz:
OpenAI currently is the only major frontier lab that has faced like,

Ejaaz:
I don't know, what is it, five lawsuits? I saw Elon Musk taking a dunk earlier,

Ejaaz:
but he actually forewarned this in 2024.

Ejaaz:
It's patently absurd that Apple isn't smart enough to make their own AI,

Ejaaz:
yet is somehow capable of ensuring that OpenAI will protect your security and

Ejaaz:
privacy, referring to the deal that they signed with OpenAI where ChatGPT will

Ejaaz:
be used in Apple products.

Ejaaz:
So I get it. I see why he's doing this.

Josh:
Yeah, I think Apple needs to harden up a little bit. And it's been funny actually

Josh:
seeing the commentary from Elon publicly because he is just really leaning into

Josh:
Sam and he has been roasting Sam on Twitter for the last couple of days.

Josh:
It's been rough. But you mentioned all the safeguards that they do to keep leaks from happening.

Josh:
And yet simultaneously, just I think at the end of June, like a couple of weeks

Josh:
ago, there was a 630 gigabyte leak of the new iPhone product suite from their

Josh:
Indian manufacturer, Tata, I believe the name is.

Josh:
And it was the biggest leak in apple history by far it had all the quality assurance

Josh:
testing it had literal images and cad design files

Josh:
of the next iphone that we're going to be getting in september and it was this

Josh:
huge leak that kind of showed a lot of company secrets just open to the public 630

Josh:
gigabytes of leaks so apple has a serious problem on their hand they need to

Josh:
harden up they need to lock things down because it seems like they're really

Josh:
just running on these these processes that have existed for a very long time

Josh:
but there's no one there to really enforce or strengthen them.

Josh:
And I really hope that Apple gets hard again. And with John at this as the leadership

Josh:
position, he starts to clamp down and he starts to actually cause some havoc.

Josh:
It's like Apple has been run by by Mr. Softee for a long time.

Josh:
And he's an incredible CEO. And he's done amazing things.

Josh:
But like Apple is very much in wartime right now. The iPhone legacy is not going

Josh:
to last much longer with all these incumbents kicking their ass in AI and building

Josh:
somewhat competitive hardware products, TBD, assuming they're allowed to get them out the door.

Josh:
But OpenAI is doing what they need to do to win, and Apple is not really doing

Josh:
anything to stop that or to put their foot on the gas. We haven't had any new

Josh:
products from Apple in a long time in terms of categories.

Josh:
They still have not shipped the new Siri. So there's definitely a bones pick

Josh:
with Apple there, and I hope this is the first step of them really turning it

Josh:
around and shifting the tides.

Josh:
It's also important to note that OpenAI tried to sue Apple earlier this year,

Josh:
which I thought was funny, for not really fully doing what they promised for

Josh:
their contracts around chat GPT integration. and.

Josh:
The reality is, is that they probably clawed that back real quick once they

Josh:
found out what was actually going on.

Josh:
It's just a disaster. It's been a train wreck for everybody involved.

Josh:
Apple actually reached out to OpenAI in February, alerting them of all of these

Josh:
findings and happenings.

Josh:
OpenAI did not reply. So it's like, this whole thing is kind of a train wreck here.

Josh:
And it's going to be interesting to follow the lawsuit and see what else comes

Josh:
out. Because if this is already public and this is just in the initial filing,

Josh:
oh my God, the emails that are going to be leaked are going to be spectacular.

Ejaaz:
Well, that's one thing about this entire thing. If the lawsuit does go to court,

Ejaaz:
we are like, Open Air has to give up all the confidential information.

Ejaaz:
We're going to see the designs.

Ejaaz:
We're going to know exactly the code names of what hardware devices they're

Ejaaz:
trying to build, what that looks like, all exposed for everyone to see.

Ejaaz:
I saw a blog post from Satya Nadella over the weekend. I don't know if you saw

Ejaaz:
this, Josh, but it was called The Reverse Information Paradox.

Ejaaz:
Now, it's a long essay, but I'll summarize what he's basically saying.

Ejaaz:
He's basically saying that typically in an information world where you have

Ejaaz:
a buyer and a seller of information, the seller bears all the risk,

Ejaaz:
meaning in order for a buyer to know that the information is good,

Ejaaz:
they have to see the information first.

Ejaaz:
So technically they're getting the product before they even buy it.

Ejaaz:
And then, you know, if the seller kind of like,

Ejaaz:
shows a buyer and they're like, oh, well, I don't really want this anymore,

Ejaaz:
but they have the information. They can just get away with it.

Ejaaz:
In the world of AI, it's reversed. If you are an AI lab like OpenAI,

Ejaaz:
like Anthropic, you and I use these models. We impart all our information over,

Ejaaz:
Which becomes more valuable for the model to train and become more intelligent.

Ejaaz:
But we're just giving that away for free. In fact, we're paying them for the privilege.

Ejaaz:
We pay hundreds of dollars a month to access this model that only gets smarter

Ejaaz:
from personal information that we voluntarily give them.

Ejaaz:
And so the point that Satya Nadella was making here is in a world where this

Ejaaz:
is the case, enterprises need to safeguard their information.

Ejaaz:
They need to harden down their systems and they need to make sure that there's

Ejaaz:
no proprietary information leaking.

Ejaaz:
This is the exact same thing that's happening with Apple, just on hardware secrets specifically.

Ejaaz:
But I think it's going to become a growing issue for all these major companies,

Ejaaz:
whether you're Salesforce, whether you're Microsoft, whether you're Google,

Ejaaz:
whether you're Apple, you need to contain your secrets because the more that

Ejaaz:
leaks out to these models, it'll just be trained from these Frontier Air Labs.

Ejaaz:
And technically, they can replace and do what you do. Now, of course,

Ejaaz:
there are physical constraints. You need to get the supply chain manufacturers

Ejaaz:
and all that kind of stuff.

Ejaaz:
But that's just a matter of time, in my opinion.

Ejaaz:
And it's this weird kind of internal warfare that's waging between the tech

Ejaaz:
industry that I honestly haven't seen before. It's very, very weird.

Josh:
The value of proprietary IP is so high. Huge. And the cost of it leaking is

Josh:
so high. It's like when you think about...

Josh:
An LLM breakthrough. Well, how much code is actually put into a transformer? There's not that much.

Josh:
And if there's a small efficiency breakthrough to be had anywhere,

Josh:
the downstream implications of that are billions to hundreds of billions to trillions of dollars.

Josh:
And that could be something as short as 40 lines of code.

Josh:
So the proprietary information, this IP has never been more valuable.

Josh:
And therefore, the stakes have never been higher to try to capture whatever

Josh:
amount of it as you can and make that value apply to your company.

Josh:
So it's going to be a wild race. I'm sure this isn't the last instance we're

Josh:
going to see of somebody stealing IP, stealing employees. I mean,

Josh:
this is only becoming a more vicious trend.

Josh:
We found out before starting this recording that California does not enforce

Josh:
non-competes, which is a crazy thing that I learned today.

Josh:
So anybody who's working in California can just leave and go work at a competitor

Josh:
the very next day. So you have to imagine that plays a big role in all of this.

Josh:
And it's kind of baked into the culture. This is just what happens.

Josh:
And companies have to work really hard to try to retain their talent, retain their IP.

Josh:
And just do the best they can. But that is the lawsuit, I think.

Josh:
That's what we know so far. Oh, I cannot wait for this to go into court if it

Josh:
does. We're going to read through every single one of those emails.

Ejaaz:
Josh, let me ask you a question before we round out.

Ejaaz:
Do you think Apple is concerned and worried at OpenAI? Or do you think this

Ejaaz:
is just a tactic where they're like, I just kind of want to put the little guy down? What do you think?

Josh:
I think they have to be concerned. I think it'd be irrational not to be concerned.

Josh:
OpenAI has, what, a billion plus monthly active users and they...

Josh:
Have figured out AI in a way that Apple has not. AI is very clearly ascending

Josh:
and the traditional consumer software space is clearly descending.

Josh:
There's going to be this increased trend towards an AI first operating system

Josh:
in a way that an iOS operating system is not.

Josh:
And I think that's like a serious cause of concern. I mean, you have the guy

Josh:
who designed all of the flagship Apple products over at OpenAI now working on

Josh:
this new hardware suite.

Josh:
We know what him and his team are capable of, now that they have the manufacturing

Josh:
capabilities, probably, and they have a lot of the secrets of how Apple works,

Josh:
that's a serious threat.

Josh:
I mean, if they can create consumer-grade products at Apple level with a software

Josh:
stack that OpenAI is capable of, that's a really compelling product.

Josh:
And this might be the first time that I actually buy a device other than an

Josh:
Apple device to use as my daily driver.

Josh:
Like, I can't think of the last time I used anything other than an Apple device

Josh:
on a day-to-day basis. I have my AirPods, I have my MacBook,

Josh:
I have my iPhone, I have my Apple Watch.

Josh:
If OpenAI releases a hardware product, I'm buying their version of it.

Josh:
If there are smart AirPods with cameras with full AI baked in that look really

Josh:
cool, like those cufflinks, I'm buying.

Josh:
And I think that's a serious threat to Apple. So I would be concerned if I was

Josh:
them. And I think this probably comes out of a place of concern.

Josh:
Should they have done it sooner? Yes.

Josh:
After they filed that, they reached out to OpenAI in February,

Josh:
they probably should have just filed the lawsuit back then.

Josh:
But I guess now the evidence that they've acquired is undisputable.

Josh:
And now they have a pretty strong case. So yeah, if I'm apple i'm i'm a little worried about this.

Ejaaz:
I think they're worried um but i also think a year from now this will be seen

Ejaaz:
as like the kick up the butt that they needed i mean like listen the bar is

Ejaaz:
so low at apple right now when it comes to ai stuff they haven't even

Ejaaz:
launched their revamped siri ai right now that's going to be powered by a version

Ejaaz:
of their apple foundation models and the google gemini model as well so we're

Ejaaz:
going to see a lot of that start to release at the end of the uh apple will

Ejaaz:
finally make their comeback and

Ejaaz:
I honestly think that Apple hasn't even tried at this point.

Ejaaz:
And so if the question that is being asked is, OpenAI versus Apple,

Ejaaz:
is this a serious threat? My honest take is like, no.

Ejaaz:
To the point that we mentioned earlier, OpenAI still has a ton of challenges

Ejaaz:
to overcome aside from this lawsuit, which is like figuring out the supply chain,

Ejaaz:
manufacturing relationships, scaling this thing.

Ejaaz:
Remember, like they only announced an ambitious goal. This is from Sam's words, not mine.

Ejaaz:
Of 100 million units. Apple has currently 3.5 billion live devices out there

Ejaaz:
right now. To catch up to that is going to take a while.

Ejaaz:
In a world where supply resources are super constrained, like we had an episode

Ejaaz:
last week where we talked about the memory wars and the fact that prices have

Ejaaz:
hiked up 500% in the last year and a half, that isn't gonna get satiated over

Ejaaz:
the next couple of years.

Ejaaz:
It's gonna take decades to do. So OpenAI still has a mountain to climb and this is just another one.

Ejaaz:
And it comes literally like two weeks after they settled the Elon lawsuit.

Ejaaz:
So Sam can't catch a break, but I wish them the best of luck and we'll see how

Ejaaz:
this plays out. We will be the first and only AI podcast to cover this in meticulous detail.

Ejaaz:
But I believe that takes us to the end of this episode. Josh, any final thoughts?

Josh:
Um, no, I cannot wait to see this freaking device, man. We've been waiting since

Josh:
the inception of this show.

Ejaaz:
All I want to do is just see the device.

Josh:
Just show me the damn thing. Show me how it works and tell me what I'm going

Josh:
to get it in my hands and how much money it's going to cost. That's it.

Josh:
That's all I want to know. Everything else is just like, whatever.

Josh:
Listen, if they have to steal a couple of secrets to make it better,

Josh:
like that's fine by me. I mean, sucks for Apple, but that's an Apple problem.

Ejaaz:
That's not a consumer problem. We're winners at the end of the day.

Ejaaz:
The listeners, the consumers are the winners. Like let these guys find it out.

Ejaaz:
We just get a sick product sooner hopefully

Josh:
Sooner hopefully but that's it that's the story so if you enjoyed as always

Josh:
please do not forget to share with a friend subscribe to our newsletter leave

Josh:
us a review on your favorite podcast player and with that we part ways we do

Josh:
have to ask about sponsors too ejs you have a little message about this yes.

Ejaaz:
I do i do so so josh myself and luke the producer have been keeping the lights

Ejaaz:
on ourselves uh we've spun out we're officially independent and we are looking

Ejaaz:
for the most amazing partners to work with.

Ejaaz:
What that would look like is if you have a company, a product or a service that

Ejaaz:
you would want to put in front of our audience, we reach up to like a million

Ejaaz:
of you every single month.

Ejaaz:
We would love to hear from you. We use tools, features, new ones that we don't

Ejaaz:
even talk about on the show every single day.

Ejaaz:
And we would love to talk about your product.

Ejaaz:
A few of you have already reached out, but we would love to hear from more of

Ejaaz:
you. And remember, this doesn't need to necessarily be you or your company or

Ejaaz:
your product or service.

Ejaaz:
If you know someone, if you have a friend, please reach out to them and let them know.

Ejaaz:
Our email is in the description. You can reach out to us on X wherever we are.

Ejaaz:
We would love to hear from you.

Josh:
But yeah, that's it. Thank you as always. And that's the episodes.

Josh:
Thank you so much for watching as always. And we'll see you guys in the next one.

Ejaaz:
See you guys.