Apple, Meta have discussed an AI partnership

Apple offers a distribution advantage through its iPhones for companies developing generative AI. PHOTO: SAMSUL SAID/BLOOMBERG NEWS
Apple offers a distribution advantage through its iPhones for companies developing generative AI. PHOTO: SAMSUL SAID/BLOOMBERG NEWS

Summary

The longtime rivals have held talks about potentially integrating Meta’s generative AI model into Apple Intelligence, the recently announced AI system for iPhones and other devices.

In its hustle to catch up on AI, Apple may be turning to a longtime rival: Meta.

Facebook’s parent has held discussions with Apple about integrating Meta Platforms’ generative AI model into Apple Intelligence, the recently announced AI system for iPhones and other devices, according to people familiar with the matter.

Meta and other companies developing generative AI are hoping to take advantage of Apple’s massive distribution through its iPhones—similar to what Apple offers with its App Store on the iPhone.

A latecomer to generative AI, Apple has developed its own smaller artificial-intelligence models but has announced it will turn to partners for more complex or specific tasks. When Apple Intelligence was unveiled earlier this month at the company’s Worldwide Developers Conference, OpenAI’s ChatGPT was announced as the company’s first partner.

“We wanted to start with the best," said Apple software leader Craig Federighi, noting that ChatGPT “represents the best choice for our users today." He also said Apple wanted to integrate Google’s Gemini as well.

In addition to Google and Meta, AI startups Anthropic and Perplexity also have been in discussions with Apple to bring their generative AI to Apple Intelligence, said people familiar with the talks.

If Apple strikes deals with partners beyond OpenAI, Apple said customers could choose which external AI models they want to use in addition to Apple’s internal systems.

The discussions with Meta highlight the unlikely alliances that are forming between major technology companies in the artificial-intelligence era. OpenAI’s tech is set to be embedded in Microsoft and Apple devices. And an Apple and Meta deal would be noteworthy given how much the two companies have been at loggerheads over other emerging tech issues.

In its talks with other AI companies, Apple hasn’t sought for either party to pay the other, the people said. Instead, the AI companies can sell premium subscriptions to their services through Apple Intelligence. As it does on its app store, the iPhone maker would keep a cut of subscription revenue from its devices.

The discussions haven’t been finalized and could fall through. Even though deals with Apple would help AI companies obtain massive distribution of their products, it is unclear how much of a financial windfall it would be.

OpenAI will be offering a free version of ChatGPT through Apple Intelligence, but users can also link a premium ChatGPT account to their Apple device.

While ChatGPT usage is expected to double with the Apple partnership, OpenAI’s infrastructure costs are expected to grow 30% to 40%, said Gene Munster, a longtime Apple analyst and managing partner at Deepwater Asset Management. Munster expects 10% to 20% of Apple users will opt into paying for a premium AI subscription to a product like ChatGPT. That could mean billions of dollars for AI companies that integrate successfully with Apple’s new platform.

“Distribution is hard to get," Munster said. “The beauty of what Apple has built is that you’ve got this engaged distribution at scale."

A partnership with Meta would help elevate the stature of its efforts in the tech industry’s AI race and represents a rare olive branch between the social-media giant and the iPhone maker. Meta launched Llama 2, its large language model, in July 2023, and in April, the company released the latest versions of its AI models, called Llama 3. While Llama has gained support and adoption within the tech industry and among startups, a deal with Apple would represent a major victory for Chief Executive Mark Zuckerberg and his company’s AI division.

Tensions between the two companies have persisted for more than a decade. Most notably, Apple in 2021 introduced privacy changes to its mobile devices that Meta later said would cost it $10 billion in lost revenue in 2022. In April, Meta published instructions encouraging advertisers to use a workaround to avoid paying a 30% service charge to Apple for “boosted posts," a form of advertising that the two companies bickered over for years, The Wall Street Journal has reported.

By holding discussions with a range of AI companies, Apple is able to avoid becoming overly reliant on OpenAI. But it remains to be seen how open Apple will make its new AI platform available to these external AI companies. These AI deals take time because for now they have to be struck on a per-company basis, unlike the App Store where an established process exists in which developers can more freely submit their apps for Apple’s approval before showing up in its digital storefront.

Apple’s Federighi said it makes sense for the company to offer numerous AI options because users will prefer different models for different tasks, such as creative writing or researching medical information. “People are going to want to draw on that kind of expertise that might not be part of our core," he said at the developers conference earlier this month.

News Corp, owner of the Journal and Dow Jones Newswires, has a content-licensing partnership with OpenAI.

Write to Salvador Rodriguez at salvador.rodriguez@wsj.com, Aaron Tilley at aaron.tilley@wsj.com and Miles Kruppa at miles.kruppa@wsj.com

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