Did ChatGPT steal iPhone secrets? Apple and OpenAI, once partners, head to court

Apple CEO Tim Cook listens to then-President Joe Biden speak at TSMC's semiconductor manufacturing facility in Phoenix, Arizona, in December 2022. Apple filed a lawsuit Friday in a US federal court in California alleging that OpenAI stole its hardware trade secrets. [AFP]

Apple and OpenAI, once AI collaboration partners, are heading to court. Apple has filed a major lawsuit against OpenAI — the maker of ChatGPT — alleging that the company stole its hardware trade secrets. The case has drawn wider attention after Jony Ive's startup was also named as a defendant.

Apple filed the trade secret misappropriation suit Friday against OpenAI and two former Apple employees who had joined the company, in the US District Court for the Northern District of California.

The individuals named in the complaint are Tang Yu Tan, OpenAI's chief hardware officer, and Chang Liu, a former senior systems electrical engineer at Apple. Tan served as a vice president at Apple for 24 years, overseeing the design of iPhone and Apple Watch products, before taking the CHO role at OpenAI. Liu worked as an electrical engineer at Apple for eight years.

Apple alleged in the complaint that both individuals unlawfully obtained confidential internal materials before moving to OpenAI. The company said Liu, who joined OpenAI in January, failed to return his Apple work laptop and exploited an authentication vulnerability to access Apple's internal storage systems. Apple alleged he downloaded dozens of confidential files in the process, including information on unreleased products and circuit board manufacturing documents.

Apple also leveled allegations against Tan. The company said he transferred supply chain documents and industry summary files to his personal email before leaving Apple, and that design and manufacturing know-how for core hardware — including the iPhone, Apple Watch and MacBook — had flowed into OpenAI's hardware operations.

The Apple logo. [Reuters]

Apple's language in the complaint was blunt. The company alleged that OpenAI had extracted confidential information at multiple levels of the organization — from technical staff up to the chief hardware officer — and said OpenAI's nascent hardware business "rests on an unstable foundation, rotten at its core, built on illegally stolen trade secrets."

The complaint also alleged that Tan, during OpenAI's recruitment process, pressed current Apple employees for internal information and asked them to bring physical components to show him. Apple further alleged that employees who had accepted offers from OpenAI were instructed to conceal their plans and remain at Apple as long as possible. Apple said more than 400 of its former employees have moved to OpenAI.

The lawsuit also names io, the company founded by former Apple chief design officer Jony Ive. Ive is the designer behind the iPhone, iMac and MacBook, among other flagship Apple products. OpenAI acquired io last year for $6.5 billion.

Apple's decision to target io signals a direct challenge to OpenAI's push into hardware. OpenAI has been developing AI-dedicated devices beyond ChatGPT, and its tie-up with Ive had been seen as a defining moment in that effort. For Apple, the move marks the arrival of a new competitor in the market for AI devices that could follow the smartphone and wearable era.

The two companies' relationship was far friendlier just two years ago. In 2024, Apple agreed to integrate ChatGPT models into its new AI feature suite, Apple Intelligence. At the time, Apple Senior Vice President Craig Federighi described OpenAI as "a pioneer and market leader."

OpenAI CEO Sam Altman speaks at the Snowflake Summit 2025 at the Moscone Center in San Francisco, California, in June last year. [Getty Images]

The mood between the two companies has since shifted. Apple chose Google's Gemini as the AI model for its voice assistant Siri, while OpenAI moved to formalize its hardware ambitions through the io acquisition. The former partners have become competitors in the AI device market.

Across the broader tech industry, competition over AI models has spilled into a race for hardware dominance — spanning smartphones, wearables and dedicated AI terminals. Because the device through which consumers access AI is directly tied to platform control, the Apple-OpenAI clash is being read as more than a trade secret dispute: it is a battle for leadership in the next-generation AI device market.

Apple said it had asked OpenAI before filing suit to halt the relevant activities and destroy all confidential materials, but received no response. Apple is asking the court to order OpenAI to stop using and destroy the stolen trade secrets, and to award damages.

If Apple's claims are upheld, OpenAI's hardware development timeline could face significant disruption. Should the court find that the disputed technology was incorporated into the design of future devices, OpenAI may be required to rework its product designs.

OpenAI immediately rebuffed the allegations. In response to the lawsuit, the company said it has "no interest in any other company's trade secrets" and that it remains "focused on developing innovative technology that empowers people around the world."

A woman walks past an Apple Store in a shopping mall in Xuhui District, Shanghai, China, on Tuesday. [AFP]

Market observers say the lawsuit could further strain the relationship between the two companies. Paolo Pescatore, an analyst at PP Foresight, told Reuters that Apple views OpenAI as shifting from partner to competitor, while OpenAI is seeking to reduce its dependence on the iPhone and build a direct relationship with consumers. "Even if the allegations are not proven, this lawsuit could delay OpenAI's entry into the hardware market and damage the partnership between the two companies," he said.

Some analysts, however, caution that hiring large numbers of former Apple employees does not in itself constitute wrongdoing. Mark Lemley, a professor at Stanford Law School, said the case has the potential to become "a very big deal," but noted that in California, recruiting a competitor's staff is not inherently illegal — the central question is whether confidential materials were actually taken and used.

International media have described the case as a "blockbuster lawsuit," given that it pits Apple, the company that defined the smartphone era, against OpenAI, the defining company of the generative AI era, in a direct clash over the hardware market. Analysts say the outcome of the legal battle could reshape both the pace and the landscape of competition in AI devices.

kwater@heraldcorp.com