Limitless: An AI Podcast

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.