Better Offline - Let Tim Cook

Episode Date: June 19, 2024

Last week, Apple announced that they're integrating artificial intelligence into your iPhone and Mac in a stunningly demure and reserved presentation. In this episode, Ed Zitron walks you through whether you should trust Apple - and how OpenAI agreed to the worst deal in tech history to integrate ChatGPT in the least-prominent way. EPISODE LINKS: https://tinyurl.com/betterofflinelinks See omnystudio.com/listener for privacy information.

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Another podcast from some SNL late-night comedy guy, not quite. Unhumor me with Robert Smygel and friends. Me and hilarious guests from Bob Odenkirk to David Letterman help make you. you funnier. This week, my guest, S&L's Mikey Day and headwriter, Streeter Seidel, help an a cappella band with their between songs banter. Where does your group perform? We do some retirement homes. Those people are starving for banter. Listen to humor me with Robert Smigel and friends on the I-Heart Radio app, Apple Podcasts, or wherever you get your podcasts. The story I told myself can then shape my behavior, and that can lead me to sabotage the

possibility of connection. This Mental Health Awareness Month, tune into the podcast Deeply Well with Debbie Brown if you've been searching for a soft place to land while doing the work to become whole. This podcast is for you to hear more. Listen to Deeply Well with Debbie Brown from the Black Effect Podcast Network on the Iheart radio app, Apple Podcasts, or wherever you get your podcast. This is Saigon, the story of my family and of the country that shaped us. From IHeart Podcasts, Saigon. You don't think I'm serious about a free Vietnam?

One city, a divided country, and the war that tore America apart. It's for Vietnam. They're pouring patril all over here. Freedom for Vietnam! There's a fire coming to this country, and it's going to burn out everything. Listen to Saigon on the IHeart Radio app, Apple Podcasts, or wherever you get your podcasts. I'm Joey Dardano, and on my new podcast, hope from a hypocrite, I'll be changing lives. helping people in need with thoughtful solutions.

Sike, I'm a comedian. I'm not qualified to give good advice. Join me and my comedian friends as we riff, rant, recommend some of the most legally dubious advice known to me. This is Help from a Hypocrite, the worst advice from the dumbest people you know. Listen to Help from a Hypocrite Wednesdays

on the Iheart radio app, Apple Podcasts, or wherever you get your podcasts. Quarzo Media. Hello and welcome to BetRoy. offline. I'm your host and generally optimistic man, Ed Zittron. Last week, Apple announced Apple Intelligence, a suite of features coming to iOS 18, that's the next version of the iPhone software, in a presentation at Fast Company called Uninspired, Futurism called Boring, and Axios claimed failed to excite investors.

They did not even check the stock ticket. Anyway, the presentation, given at Apple's Worldwide Developers Conference, usually referred to as WWDC, and where Apple usually announces its next software updates, felt remarkably demure in comparison to May's Google I.O. conference, which is Google's equivalent, where CEO Sundar Peshai and head of search Liz Reid hyped the next generation of Google products and search updates that absolutely nobody asked for.

Historically, Worldwide Developers Conference is where Apple announced major updates to both its product and software lineups. At WWDC 2005, the late Steve Jobs announced the company would move from IBM designed and Motorola manufactured power PC processors, allowing for faster and more power-efficient computers, as well as the ability to dual-boot Windows, a huge moment for Max that was met with rancorous applause from people that really should have known better. 15 years later, Tim Cook, now CEO, would announce Apple's shift away from Intel stagnating X-86 architecture to Apple's homegrown, arm-based processors, starting with the M-Series processes that have now become ubiquitous across

Macs and iPads, one which was met with the bombastic promise that these were the most powerful chips ever created. I should add, by the way, the M-Series processes are actually probably one of the better things that's come out in the last 10 years. The average MacBook Air is insanely fast now. Like, I have a MacBook Pro, it's phenomenal. A lot of you say I'm not positive, okay? These are things I like. Here are things I like. Are you happy now? I am, kind of. Anyway, WWDC is where Apple has unveiled every new version of the Mac operating system OSX. It's where the original Mac Pro, FaceTime, and the iPhone App Store were introduced to the world. This is the conference where Apple flexes its muscles and boasts about how powerful and important Apple is. Now you can understand

why this year was just so strange. Gone was Apple's trademark bombast, its propensity to tell the world how good it was at everything and how important its next big thing was. Instead, we got this weird juxtaposition between, we're putting AI in your phone and it's totally fine, it's not a big deal, you shouldn't be scared at all, it's not that big deal, please don't be mad at us. Despite this ostensibly being Apple's big artificial intelligence play, CEO Tim Cook and SVP of engineering Craig Federiggy, spent far more time.

explaining how much they love privacy and cherish your data and would never share it with anyone and listen to all the ways we're keeping it private, before casually sauntering into a series of product updates that appear to actually use AI for a purpose and kind of useful, and heartily suggests that Apple is intentionally trying to distance itself from the AI hype train. And while it's integrating chat GPD into iOS 18, which don't worry, I'll get to later, It's doing so an arm's length approach with most of the day-to-day AI work done by the company's own models and actually on your device. These AI integrations, which arrives sometime in the fall to the iPhone 15 Pro and iPhone 15 Pro Max, that's autumn for my British readers and listeners, along with iPads and MacBooks with M1 or later chips,

they're fairly straightforward and don't do anything we haven't really seen elsewhere, which is kind of the Apple game. Apple's AI can generate transcripts of course, but not before warning participants that it's doing so, generate images through a tool called Image Playground, help write and rewrite emails, kind of like Grammally does, and perform distinct actions across multiple apps, like adding slides to a presentation or opening a web image with the Photos app, where you can edit it. The last item's a little bit fuzzy is it extends to both Apple's own apps and other third-party apps,

and the functionality itself is expected to roll out over the coming year or so. And as ever, take any promises made without a demo with a big grain of salt, which I guess is just a regular grain of salt when you think about it. Apple also says that Siri will soon have an awareness of what's on your screen and be able to respond appropriately. In one of their demos, you're filling out a form that asks for your driver's license number. Siri can then look through your photo library, identify any pictures of your license, and grab the pertinent information for you. Equal parts useful and creepy, and also I really do not recommend having a picture of your... driver's license saved on your phone. But thanks to the power of artificial intelligence, you can now generate your own custom emojis, a feature that screams we have to fill a few

minutes of this goddamn presentation. But nevertheless, they were quite excited, more excited than the Open AI integration, which, as I've said, I will get to later, as it requires a bit of space for me to laugh. Apple claims that many of these features run entirely on your device, and those that don't use something called private cloud compute, where Apple claims, in a lengthy privacy statement I'll link to, that at no time will anyone ever have any access to any of the data that's being processed on their servers, even, and I quote, during active processing,

meaning when Apple's servers are handling the request. Apple has also offered security researchers the opportunity to personally verify the claims it's making, and in general, the news... It seems to have been well-received, though some, like Chief Privacy Officer Steve Wilson of Exebeam told Dark Reading, worry that threats in Generative AI are poorly understood, and that despite Apple's best efforts and, no doubt, heavy policing,

some will slip through the cracks. On some level, Wilson is being a little alarmist, with his only criticism being that we don't know everything about this thing, generative AI, and thus should be scared about what we don't know, which isn't wrong. On the other hand, he's right in so far as far as, that we are relatively early days into the mass-scale use of large language models like Apple's, like GPT, like Anthropics Claude.

Apple has chosen, albeit cautiously, to take the risk of integrating these models into devices at a time when companies like Google and meta have proven that one cannot simply trust that a multi-trillion dollar company will maintain the stability and privacy of a product, or, for that matter, can guarantee the accuracy of its outputs. Also really doesn't help that Apple CEO Tim Cook told the Washington Post that Apple's AI is short of 100% when it comes to hallucinations, which as a reminder are when these LLMs tell you something authoritatively that isn't true. And this is a little bit worrying when we're talking about an AI model that's taking actions across your apps. These features are predominantly running on Apple's own models, like I've said, so not on GPT or Claude or anything, which, according to Apple's. Apple are trained using licensed data, such as images licensed from Shutterstock.

Data selected to enhance specific features, no idea what this means, but it's from license data at least, as well as publicly available data collected by Apple's web crawler Applebot, which Apple allows publishers to opt out of using a rule added to their website's code. Which I should add does not solve the bloody problem if Apple has already used the data for training purposes, which is bordering on impossible to confirm. I should add, I have added this code to my website. You're not getting my blogs, Mr. Cook. And the thing is, if Apple already has done this,

if they've already scraped this stuff, if they've used publicly available, which could mean any website on Google, for example, it's indicative of some really shady, shitty, underhanded behavior. Well, it's fair to say that Applebot, the web scraper isn't new. It arrived at some point in 2015.

It wasn't really publicized that much, save for a few posts on Apple rumor sites speculating that the company was working on a replacement to Google search. Which, by the way, it never happened because Google pays over $10 billion a year to Apple for that monopoly. Jesus Christ. Prior to the launch of Apple's generative AI features, Applebot's sole stated purpose was to provide data for Siri and Searchlight. The search built into MacOS and X that scours both the user's hard drive so that it can pull data out. So, say, you're looking for a file or it can search for something on the internet. generally a useful feature, but an entirely different one to a generative AI one.

If Apple is already training its models on data scraped by Applebot, it would be immensely deceptive using a tool way beyond its intended purpose, or at least its advertised one. If this came to pass, those unwilling to have their content repurpose this training data for a trillion-dollar tech company would really have nowhere to go. What are you going to do? Getting an AI to unlearn something isn't exactly straightforward, and Apple has yet to explain how that might work. I've reached out to Apple for comment here, but it's unclear exactly how it intends to fulfill this promise that you can opt out of being included in their training data, especially if the Applebot crawler has already allowed said data to be fed into the model. If I hear back, it'll be a little bit of a pain in the ass, but I will update that here.

And because I love you all. I love you all so much. Another podcast from some SNL late-night comedy guy, not quite. Unhumor me with Robert Smygel and friends. Me and hilarious guests from Jim Gaffigan to Bob Odenkirk to David Letterman, help make you funnier. This week, my guest, SNL's Mikey Day and headwriter, Streeter Seidel, help an a cappella band with their between songs banter.

There's the worst singer in the group. The worst? Yeah. Me. Is there anything to the idea that because you're from Harvard, uh, you only got in because you're parents. made a huge donation. The yard birds, right?

That's the name. The Harvard Yard. They're open. Do you have a name suggestion? We're open. Since you guys are middle-aged. One erection. Listen to humor me with Robert Smygel and friends

on the I-Heart radio app, Apple Podcasts, or wherever you get your podcast. Humor me. I need some jokes to make me seem funny. Run a business. and not thinking about podcasting, think again. More Americans listen to podcasts than ads supported streaming music from Spotify and Pandora. And as the number one podcaster, IHeart's twice as large as the next two combined.

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And now the Podmeets Twirled podcast. We're two men who were completely clueless to reality TV, who now have covered dancing with the stars, traitors, and we're gearing up for the season finale of Survivor. So yeah, now we're experts. I know we annoyed a lot of our listeners by our severe lack of survivor knowledge. That is the point of this show. I'm just going to remind you. I have watched some Survivor.

I obviously haven't watched enough. Did people not like it? Like what was... Yeah. Just because we... Yeah. We'll be recapping the big conclusion in the 50th season. From the final attempts at gameplay,

to the desperate plea is the finalist to a bunch of... Ha, ooh. Ha, ha, ooh. Again, we are experts. So make sure to tune into PodMeets Twirled for all our Survivor 50 takes. Listen to PodMeets Twirled on the IHeard Radio app, Apple Podcasts, or wherever you get your podcasts. There are times when the mind becomes a difficult place to live.

This is David Eagleman with the Inner Cosmos podcast, and for Mental Health Awareness Month, we're dedicating a series to understanding the mind when it struggles. I'm joined by doctors, researchers, and those with lived experience. We'll talk with singer-songwriter Jewel about anxiety. I started living in my car, and then my car got stolen. I was shoplifting. I was having panic attacks. I was agoraphobic.

And making it through hardship. To be present is a learned skill. and it's hard to be present. We'll talk with John Nelson about clinical depression and the brain implant that saved his life. What I learned is the procedure made me happy because I'm disease-free. And we'll talk with leading experts like Judd Brewer about anxiety

and John Hirschfield about obsessive-compulsive disorder and the science of how the brain can change. This is a month of deeply personal and honest conversations about what happens when the brain goes off course and what we can do about it. Listen to Inner Cosmos on the IHeart Radio app, Apple Podcasts, or wherever you get your podcasts. This week on Crimless, we're joined by our first ever guest. Sorry, our first ever human guest. I don't think I could be in the same room with Shamrock the parrot. I'd be too nervous.

That's right. The very funny Will Farrell joins Rory Scovel and me, Josh Dean, for an episode. dedicated to the many crimes committed by people also named Will Farrell. They called to his fellow officer for the nippers. What are the nippers? Very good question. No, I was thinking, would that be a good name for like a salad dressing? Simple assault. And it's a play on word, salt?

Maybe not. I say we invest and we see. There's only one way to know. This did not amuse the cops. By the way, normally the cops are amused. But this did not abuse the cops. Will even comes clean about some of his own crimes. I didn't get caught.

You know why? If you don't want to be suspected of anything, you whistle as you walk. Listen to crime lists on the Iheart radio app, Apple Podcasts, or wherever you get your podcast. Though Apple has done a better job than most, it's gross. It's disgusting, especially for the, generally the best of the big tech companies to do the thing that all these people have done. It's disgraceful that yet another big tech. company is seen the open internet as its personal property. Despite publishing a remarkable amount of information about their privacy standards and how

their models are trained, Apple likely hopes that this privacy-focused media blitz will hide the fact that it's ripping off everybody's work just like Google, just like OpenAI, and just like Anthropic and meta. Except it's doing so in a way that's a little bit easier for the media to swallow because the main selling point of its AI is not vomiting out oodles of anodyne business bullshit. unless you're using the smart reply feature in mail, which drafts a response to an email for you. I really don't understand people who need that. I'm sorry.

If you can't email someone back with your brain words, what's going on? Seriously, what's going on? But it sucks, though. It really sucks. Even for the smallest feature to have to steal people's work, especially when you have, what, $200 billion in the bank? just a complete mark of disrespect against anyone who isn't an Apple user and plenty of people who are. This is particularly worrying when you consider Apple's image generation features,

which will function similarly to chat GPT and stable diffusion, and yes, I'm getting to chat GPT. Well, I'd love to believe that Apple has only used licensed content to train its models. It really isn't the case, and if their version of publicly available includes things from Google or deviant art or social networks, Apple's just part the problem. They just part the pillaging of the internet. They are stealing just like all the other big tech companies. And there's just, this is a time when I feel a little helpless for everyone. I don't know what you do here.

And I don't think we're going to hear anything back from them. But as I mentioned, I've requested comment from Apple about this, and I hope that I get an answer. Apple's approach to PR doesn't feel me full of hope, though. It's almost as contemptuous as Tesla's. They only really provide comment and interviews or review samples to those journalists they've deemed worthy. And only really on certain subjects. It's a style that mirrors the kind of haughty, snooty image it crafted in the mid-2000s. With those goddamn I'm a Mac ads, with reporters divided into worthy and unworthy camps,

meaning, by the way, those who would bend the knee to Mr. Jobs and his company, and those who would not. And by the way, there weren't many who wouldn't. But okay. If you can put these very real concerns aside, Apple's AI announcement feels equal parts useful and extremely strange. These are not world-changing integrations. They're useful ones.

Transcriptions, a better Siri that works like it's meant to, that can take actions across multiple apps and know what you're talking about based on what you're doing on the screen. Theoretically, at least, a better photos app with better search, which is already in the product already, and the ability to edit photos with AI and remove things from backgrounds. These are cool features.

These are the kind of things that Google would staple onto a pixel phone to pretend you're going to buy one instead of an iPhone. And these are all things that a user could foreseeably want to use in their daily lives without being told that they're in the future, in large part because they are not. In fact, I'd argue that Apple's biggest generative AI push

is in trying to sell us back the idea that Siri can actually do stuff, years after most users accepted that it was kind of a voice-controlled roulette wheel that occasionally understood you. And for my Scottish, British and other people with accent friends, that's very occasionally. What's weird, though, is my Apple TV remote can understand me every time. I can say like the imaginarium of Dr. Parnassas and it will pop up immediately, but I tell my phone, hey, can you play this song on this home pod and it just freaks out? It has a complete connibption, it's so strange.

Nevertheless, putting all my jokes aside, looking at everything here, I just can't get over how reserved Apple is being about artificial intelligence. While Google has desperately tried and completely failed to convince Wall Street that it's building and selling the future by putting generative AI into search and making it worse, Apple's almost desperate to explain how boring and normal your iPhone and Mac could be and how Apple intelligence is just another feature that will make you want to keep using Apple products rather than the reason that Apple should be worth $40 trillion and keep growing forever. I like how Wyards Will Knight put it. He said that AI is a feature rather than the product.

And this is what's really interesting about this. Apple really doesn't feel like they're selling us the future. They feel like they're selling us the present. And maybe that's a good thing. Maybe it's good that Apple isn't rushing. But also the fact that Apple isn't rushing kind of says something about the way to AI movement. It suggests that outside of what they're offering, they don't really see much value to him. And now we reach the funny part. Quietly stapled onto the end of the announcement of Apple Intelligence was integration of OpenAI's chat GPT in arguably the vaguest least consequential way that I've ever seen a product launch.

After spending an hour and a half, actually more so, talking about how great its own AI features were, Craig Federigi mentioned that, and I quote, there are other artificial intelligence tools available that can be useful for tasks that draw on board, world knowledge, or offer specialized domain expertise. Just completely stupid. Anyway, saying that Apple wanted users to be able to, and again, I quote, use these external models without having to jump between different tools, integrating them directly into Apple's OS,

starting with the pioneer and market leader OpenAI. Apple's integration with OpenAI, the supposed big dog, the big swinging dick of the tech industry in the biggest announcement for the company in years, was explicitly advertised as the first of multiple integrations with multiple models. I'm not even kidding, literally that was the end of the announcement. It's very funny. And even then, ChatGPT's integration with Siri is entirely opt-in,

with certain requests that they were very unspecific about. occasionally prompting Apple to ask you if you'd like to run them through chat GPT. Like, I have these ingredients, what meal can I make? And other questions that tens, maybe even hundreds of people will find useful. Or having ChatGPT write a bedtime story for your kid, if for some reason you lack books or creativity. Or you feed into this weird thing with AI people where they think everything has to be about you and that you must be the star of every story. That's a separate podcast, Ed, put it away.

chat GPT can also generate images and summarize documents, features already available in Apple's own AI. This underwhelming addition to an already placid announcement ends with Apple adding that it intends to add support for other AI models in the future before moving on to how developers can integrate Apple's own AI. The deal that would supposedly cement Sam Altman's hold on Silicon Valley and OpenAI ended up being a two-minute-long sidebar at the end of a near two-hour-long announcement, one that requires users to agree every single time they interact with it,

with no specifics about how often that a user would actually see chat GPT. Despite the insane romanticization of Sam Wormantman's incredible technology, Apple's approach is one that begins and ends with them saying, do you really want to use this? And a remarkable lack of excitement or trust. While it remains to be seen exactly how often you'll be prompted to use it, Chad GPT's addition to Apple products feels far more like something cooked up to please Wall Street, and it worked briefly making Apple the most valuable US company,

beating Microsoft just for a minute, all without having to invest billions of dollars into another company. Now, quick side note, there's undoubtedly here a level of CYA covering one's ass here. If Apple could, it would undoubtedly monopolize AI on the iPhone, much like it has with app distribution and browser rendering engines, That's the bit of the web browser that turns HTML, CSS, and JavaScript into a web page. From the beginning, Apple has sought absolute control of the iOS and its derivatives, iPod OS, TVOS, and watchOS ecosystems.

Using user safety as a justification for, well, their kind of benevolent dictatorship. The problem is the line between protecting users and anti-competitive behavior is thin, and indeed regulators, particularly those in the European Commission, aren't convinced that Apple's ironclad control of the iPhone is entirely altruistic. And that's why you can access alternative app stores in the European Union and even install apps directly from the web. And it's why you're no longer tied into using the Safari WebKit rendering engine, even if you install an alternative browser like Brave or Safari or Firefox indeed. If Apple iced out OpenAI or Anthropic, they both could conceivably complain about Apple to the European Commission, who might rule in favor of them and

order Apple to start supporting their models. In addition to levy a huge multi-billion dollar euro fine. And so Apple chose to save itself the hassle and the cost and buried open AI and the rest of them in the back. Another podcast from some SNL late-night comedy guide, not quite. Unhumor me with Robert Smygel and friends, me and hilarious guests from Jim Gaffigan to Bob Odenkirk to David Letterman, help make you funnier. This week, my guest, SNL's Mikey Day and headwriter, Streeter Seidel, help an acapella band with their between songs banter. The worst singer in the group?

The worst? Yeah. Me. Is there anything to the idea that because you're from Harvard, you only got in because your parents made a huge donation. The group. The yard birds, right? That's the name.

The Harvard yard, but they're open. Do you have a name suggestion? We're open. Since you guys are middle aged. One erection. Listen to humor me with Robert Smigel and Friends on the I-Heart Radio app, Apple Podcast. or wherever you get your podcast.

Humor me. I need some jokes to make me seem funny. Run a business and not thinking about podcasting, think again. More Americans listen to podcasts than ad-supported streaming music from Spotify and Pandora. And as the number one podcaster, IHeart's twice as large as the next two combined. So whatever your customers listen to, they'll hear your message. Plus, only IHeart can extend your message to audiences across broadcast radio. Think podcasting can help your business.

IHart, streaming, radio, and podcasting. Call 844-844-I-Hart to get started. That's 844-8-4-E-Hart. Hey, everyone, it's Ryder Strong and Wilfridell from PodMeets World. And now the Pod Meets Twirled podcast. We're two men who were completely clueless to reality TV, who now have covered Dancing with the Stars, traitors, and we're gearing up for the season finale of Survivor.

So yeah, now we're experts. I know we annoyed a lot of our listeners by our severe lack of survivor knowledge. That is the point of the show. I'm just going to remind you. I have watched some Survivor. I obviously haven't watched enough. Did people not like it?

Like what was just because we? Yeah. We'll be recapping the big conclusion at the 50th season from the final attempts at gameplay to the desperate pleas of finalists to a bunch of ha, hoo.

Ha ha, who. Again, we are experts. So make sure to tune in a pod meets twirled for all our Survivor 50 takes. Listen to Podmeats Twirl on the IHeart Radio app, Apple Podcasts, or wherever you get your podcasts. There are times when the mind becomes a difficult place to live. This is David Eagleman with the Inner Cosmos podcast, and for Mental Health Awareness Month, we're dedicating a series to understanding the mind when it struggles. I'm joined by doctors, researchers, and those

with lived experience. We'll talk with singer-songwriter Jewel about anxiety. I started living in my car and then my car got stolen. I was shoplifting, I was having panic attacks, I was agoraphobic. And making it through hardship. To be present is a learned skill, and it's hard to be present. We'll talk with John Nelson about clinical depression

and the brain implant that saved his life. What I learned is that procedure made me happy because I'm disease-free. And we'll talk with leading experts like Judd Brewer about anxiety and John Hirschfield about obsessive obsessive compulsive disorder and the science of how the brain can change. This is a month of deeply personal and honest conversations about what happens when the brain goes off course and what we can do about it.

Listen to Inner Cosmos on the IHeart Radio app, Apple Podcasts, or wherever you get your podcasts. This week on Crimless, we're joined by our first ever guest. Sorry, our first ever human guest. I don't think I could be in the same room with Shamrock the parrot. I'd be too nervous. That's right. The very funny Will Ferrell joins Rory Scovel and me, Josh Dean, for an episode dedicated to the many crimes committed by people also named Will Ferrell.

They called to his fellow officer for the nippers. What are the nippers? Very good question. No, I was thinking, would that be a good name for like a salad dressing? Simple assault. And it's a play on word, salt? Maybe not. I say we invest and we see.

There's only one way to know. This did not amuse the cops. By the way, normally the cops are amused, but this did not abuse the cops. Will even comes clean about some of his own crimes. I didn't get caught. You know why? If you don't want to be suspected of anything, you whistle as you walk. Listen to crime lists on the IHeart Radio app, Apple Podcasts, or wherever you get your podcast. One might imagine, though, putting aside my cynicism, this is still a big deal.

right? Wow. Chat GPT on every iPhone. Well, iPhone 15 Pro and so on. That's millions, hundreds of millions of people. It's tons of M1 and M2 and M3 Macs. It's a huge deal. Each time that someone interacts with chat GPT, even though they're not profitable, that's still a sliver of revenue. They're still paying chat GPT, right? They're not just stapling this on. Sam Altman isn't doing this for exposure, is he? Yes, he is. This is not a coup at all. At least, not one for OpenAI. As reported by Bloomberg's Mark German, Apple didn't give OpenAI any money to integrate chat GPT, paying them in distribution, as I said, for a tool that loses the money on literally

every transaction. Apple doesn't appear to be paying anything. German also reports that users will be able to upgrade their chat GPT accounts to chat GPD plus through the integration. No idea. I'm sorry. It's faster. You get more requests. Who cares? But the important thing is that upgrading to chat GPT plus will likely

operate on the same terms as every other digital good on iOS, meaning that OpenAI will be paying 30% of that take to Apple unless the user upgrades directly on ChatGPT's website. This is not good for this company. To be clear, in most cases,

companies integrating ChatGPT pay them on a per thousand token basis, meaning that OpenAI will, while unprofitable, still generate revenue of some kind when people ask them stuff. Yet Apple's deal doesn't appear to pay them at all. Meaning that every single time that someone uses chat GPT on their iOS device, they will be bleeding money. The more popular it is, the more money it's going to lose them. It's a terrible deal, folks.

This deal is equal parts perilous and hilarious. It's so funny, and it's something that could genuinely end up hurting open AI, all while insulating Apple. In the event that this integration actually sees adoption by Apple's hundreds of millions of users, it's going to cost Open AI incredible amounts of money, thanks to the fact that generative AI is both compute and energy intensive, unlike any other piece of tech. Especially, as I imagine, most users will ask it the occasional question and find no reason to opt into the $20 a month chat GPT Plus subscription.

Why would you care? What is the use of this? On some level, it also shows a remarkable amount of disdain from Apple towards OpenAI. Most deals that hinge on the vast reach of the iOS ecosystem involve some kind of exchange of money. In 2022, Google paid roughly $20 billion to be the default search engine on iOS. And just to be clear, that deal, very clear. a mob style thing. That's just Google saying, look, it would be, wait, please don't build a search engine, please don't, please don't build a search engine. Our search engine is really bad. Just let me, let me pay you, man. Really gross stuff. But given the cost of running chat GPT and the fact a large language model query is inherently more sophisticated and computationally expensive than a simple search one, you'd expect the opposite to be true, right? The app would pay OpenAI something to defray its costs. But no, no money's changed hands. And if open, open. Open AI makes a sale directly on the iPhone, it'll undoubtedly be subject to the same Apple

text as every other company, like I said. This is possibly one of the worst deals I've seen in my life. It's a terrible deal, folks. And I'd also speculate that Apple likely requires some level of service level agreement for its partners, meaning that OpenAI has to dedicate resources to maintain uptime for Apple devices using ChatGPT for free, which will in turn be incredibly expensive to maintain, burning money with every query on a product that Apple will only offer when Apple's services can't do the job. And if iOS 18 doesn't bring the expected users to chat GPT, those resources are just going to kind of sit there, unused, redundant, and they could be servicing other deeply unprofitable demand.

It might be hyperbolic to describe this as text equivalent of the Versailles Treaty, but only a little bit. It's also just unbelievably funny. It's so funny. heard the last episode, you heard people talking about Sam Altman, like the art of the deal guy, the deal master, the master of contracts, the guy who can outthink us all, the mega-genius, the mega-nerd, the ultimate deal-maker who could split the valley asunder with a wave of his hand. Sam Altman is regularly described as this tier one operator, this superior intellect, and yet he has signed the worst tech deal I've seen, other than, I think,

the one signed by Yahoo with Bing from a few episodes back. It might actually be worse, though, because even then, Yahoo got paid by Microsoft. Jesus Christ, I think this also proves something else. Open AI, they have no leverage. They don't have anything they can play with. They don't have anything they can go to Apple and say, You need us, baby.

No, they haven't got shit. It's hilarious. Open AI has effectively agreed to give chat. for free to hundreds of millions of people and got absolutely nothing in return. And worse still, in this marvelous technological cacoldry, according to Anisa Gardisi of the information, Apple is already working on cutting deals with both Google and their Gemini, LLM, and Anthropics Claude to integrate them into iOS, likely using open AI's dog shit deal to leverage better terms. Altman may have been at the worldwide developers conference. He was there, people were taking

pictures of him that were acting like it was this big goddamn deal. But he didn't get to speak, nor was he mentioned during any of Tim Cook or Craig Federiggi's remarks. Apple treated chat GPT with less excitement than a new suite of emojis, kind of like an afterthought to a presentation that was deliberate and intentional in its lack of froth or hype. A series of fun, potentially exciting features, things you could play with if you wanted. All delivered with a continual promise of privacy and reliability that tacitly accepted that the AI hype train was moving a little too fast. And it's a humiliating moment for the generative AI movement, especially so for OpenAI, a company that desperately needs good news at a time when the world has become deeply suspicious

of its product and its CEO. Apple is, for better or for worse, the gatekeeper to the technology used by hundreds of millions of people, and Apple has decided that ChatGPT is a feature, not a product, and one that isn't trustworthy or useful enough to run without a user's permission or even pay for. This was on some level, OpenAI's iPhone moment, though. This was the time when the world would see exactly how important the most important tech company in the world thought the most important startup in the world was,

and the answer was not particularly important at all. Apple can and likely will dump chat GPT at a moment's notice, replacing it with any number of other lines, large language models, or ripping the feature out entirely thanks to the fact that it was introduced as a feature at the end of another feature at the end of a presentation of better, more useful features. And what's insane is, all of this is done without you creating an account. I know some of you might be a little bit scared that chat GPTs in your phone. It isn't. They don't get your queries. They don't save anything about what you're doing on there. Apple has raked them over the

coals. And you don't even need an account to use it, which means that they're not even increasing their users with this. Their queries are going up, but they can't even get any vanity metrics out of this. It's so unbelievably busted. It is one of the funniest and worst deals I've ever seen. I think it also shows that Sam Altman doesn't have the juice. He really hasn't been able to, outside of kind of intimidating people vaguely in the valley, really use his power that much. Microsoft weighed in to get him back at OpenAI because it was good for Satchin Nadella, who had kind of tied his fate to Sam's. And it's funny, the moment they step into the real world just doesn't seem to scale that well. Where are the big deals for Open AI?

Where are the huge integrations? The information reported last week that OpenAI's annualized revenue, which by the way is just a fudged figure, it takes the months of revenue so far and extrapolates from there. they say their annualized revenue is going to reach the billions in 2024, yet they're still so unprofitable. And even if Apple had paid the money to integrate ChatGBT, GBT, it would still lose money on every search. And it's so bad, I'm not sure why no one else is saying this. And maybe some are Nick Bilton and Vanity Fair,

I'll give you cred there, Nick, classic Dagnum lad. And the thing is, the few people saying it with me are also smart. I don't know. But this is a crazy bad deal. This is one that guarantees the OpenAI will bleed money every single time someone picks up if they even use it. If they don't use it, that's still embarrassing. It's still a deeply damaging thing for Open AI. Sam Altman, despite being the Valley's golden boy, didn't get to go on stage.

They didn't even in this presentation mention what ChatGBT's premium features do, nor did they really make much effort to explain why you should give a shit. And I'm not trying to romanticize Apple. There are no great big tech companies. I like my Apple devices. I'm looking forward to some of these features. That is, faint praise for a tech industry that's lost its way. But I will give them credit for Tim Cook cooking, Mr. Altman,

because this is a great time for people who like bad things happening to bad people. I know I shouldn't be calling Sam Orkman a bad person. I mean, just read the stuff about him, listen to the episode. But look what happens when a little boy from the world of startups tries and goes up against the ugly forces of capitalism, the real scary monopolies. Apple won't accept another monopoly. This is the empire. For better or for worse.

It is scary how much power Apple has. It is worth considering whether you are feeling safe using it. AI on these devices. What they've said suggests that, yeah, I would say you are. But I think that's something you really should consider. And in the episode links, I will provide all of the documentation of everything I'm talking about here, because I want you to genuinely know everything you can and make an informed decision. I will say I would be unsurprised if every single other phone company doesn't do similar stuff. Samsung's already doing AI stuff. I haven't looked, but I imagine Google is too. Everyone's going to be doing this.

I would trust Apple above them because they apparently have clearly worked out that what people actually want is for their phones to work. And that they'll keep making money just by making people happy. I'm not going to say they're super ethical. They're better than most. And they say that with a great deal of kind of annoyance because I don't really want to blow smoke with them. But back to the really fun part. This may be a genuinely dangerous thing for Open AI. and at the very least, it's deeply horribly humiliating.

Sam Altman might be able to walk into any room in the valley and say insane things like, I need $7 trillion for new energy. I need an $100 billion computer, Mr. Nadella. But when he walks up to Tim Cook, there's nothing to really say. Oh yeah, we'll add this at the end so that Wall Street feels happy. And that's all this is.

This is so idiots like Jim Kramer on CNBC can say, Wow, Apple's got Jet GPT in it. And great, it doesn't matter. It's buried. And I guarantee you, you're going to be able to turn it on. Apple aren't the best. I don't know who the best are. I don't know who the most ethical are.

I don't even know how you evaluate that. But you know what? Let Tim Cook. Thank you for listening to Better Offline. The editor and composer of the Better Offline theme song is Mattersowski. You can check out more of his music and audio projects at Mattersowski.com. T-O-S-K-I.com. You can email me at E-Z at Better Offline.com or visit Better Offline.com to find more podcast links

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