Apple Sues OpenAI Over the “AI iPhone”

Author: Hualin Wuwang

“Pizza Hut in Santa Clara” has finally made its move—officially.

On July 10, local time, Apple formally filed a lawsuit, alleging that OpenAI stole the company’s secrets by recruiting former Apple employees.

According to the lawsuit information, a former Apple senior electrical engineer named Chang Liu discovered that after leaving the company, he could still access Apple’s cloud file storage. The reason was that when he resigned, he kept the company-issued laptop, and there was a vulnerability in Apple’s system that allowed him to continue reading internal files after his departure.

In its lawsuit filing, Apple named OpenAI’s Chief Hardware Officer Tang Tan, accusing that these actions were directly guided by OpenAI’s senior leadership.

Apple wrote in the complaint, “This is just the tip of the iceberg. These improper behaviors have already become the norm there, and they are exemplified by leadership.”

If that statement is true, then this is not merely a personal mistake by one former employee—it is a systematic intelligence-gathering mechanism.

Tang Tan was originally a core figure at Apple, responsible for hardware R&D for Apple Watch and wearable devices for a long time. When he joined OpenAI, he took on the role of “Chief Hardware Officer”—a position that basically did not exist at OpenAI a year ago.

This shows that OpenAI’s decision to build a hardware department was not a whim; it’s a serious effort to assemble a team.

The lawsuit also notes that currently more than 400 former Apple employees are working at OpenAI. This is not ordinary hiring—this is OpenAI’s full-scale, targeted “blowing up” of Apple’s hardware team.

01 A failed collaboration

To understand today’s lawsuit, you have to go back to that handshake in 2024.

That year, Apple announced a collaboration with OpenAI and integrated ChatGPT into iOS. The presentation looked great at the event—Cook and Altman each said things that sounded like mutual appreciation.

But the friction behind the collaboration has always been there.

Apple was worried that OpenAI’s privacy standards were not strict enough and did not feel comfortable handing user data to a third party it couldn’t control. OpenAI, in turn, became increasingly annoyed, feeling that Apple had buried the ChatGPT entry point too deeply, so ordinary users could not reach it at all. And the revenue split they had agreed on was nowhere near what they had expected.

A description from an OpenAI executive says it all about the situation at the time: “Basically, they said OpenAI needed to take a leap of faith and believe in us—then it didn’t turn out well.”

A leap of faith. In business collaborations, this phrase is usually the last step before a deal collapses.

By May of this year, Bloomberg had already reported that OpenAI was considering suing Apple, citing breach of contract. No matter which company moves first, it’s only a matter of time.

In the end, Apple moved first.

02 OpenAI’s unspeakable problem

Over the past two weeks, if you look only at OpenAI’s product moves, it’s easy to think this company is in a state of heightened excitement.

On July 9, it released the GPT-5.6 Sol flagship model, along with Terra and Luna, emphasizing stronger frontier reasoning and long-term agent work capabilities. On the same day, it launched the GPT-Live-1 full-duplex voice model, claiming to make conversations with AI feel more natural. A few days earlier, news also emerged that negotiations were underway to transfer 5% equity to the U.S. government—based on a valuation of $852 billion, the value of this equity is about 42.6 billion RMB.

With product launches coming thick and fast, valuations rising, and actions frequent—this is the tempo a company preparing for an IPO would typically have.

Then Apple’s lawsuit arrived.

CNBC’s analysis put it plainly: this lawsuit adds yet another risk variable to what OpenAI already expected to become a historic IPO. Two months ago, OpenAI had just won a high-profile lawsuit against Elon Musk. Now, it has to face another opponent of a completely different scale in court at the same time.

What Apple has accumulated in hardware and its supply chain is something OpenAI’s hardware team would need many years to even approach. The timing of this lawsuit is precisely when OpenAI’s hardware business is at its most fragile stage.

Apple also spelled this out in its complaint, saying that OpenAI’s emerging hardware business is now “corroded on the most fragile foundation by its illegal reliance on compromised commercial secrets.”

03 Nobody wants to miss an AI iPhone

To be honest, talent flow in Silicon Valley has never been “clean” behind the scenes.

Engineers carry memories of their former employer’s architecture, their understanding of unreleased products, and knowledge of internal decision-making pathways, then jump ship to competitors—this happens every day. It’s just that most of the time, everyone chooses to turn a blind eye.

But this time is a bit different.

Tang Tan is not a typical engineer; he is one of the leaders in Apple’s core hardware line. The laptop in Chang Liu’s case is more like a metaphor—someone didn’t just take away memories, but also kept a key that allows them to keep entering.

If Apple’s lawsuit can be upheld, what it establishes is not only this single case, but a signal: that during an AI company’s process of building a hardware team, the practice of acquiring a competitor’s core intellectual property through systematic poaching can have legal consequences.

The deterrent value to the entire industry may be far greater than the amount of damages ultimately awarded.

Industry analyst Ming-Chi Kuo previously analyzed that the device OpenAI is developing may be one that relies on AI agents rather than a traditional application-based smartphone. If this direction proves correct, then the competition between OpenAI and Apple is not about an AI company trying to grab market share from a traditional technology company—it is directly going after the iPhone’s core logic.

In the end, the two companies will inevitably have a head-on confrontation—this is probably an outcome everyone already knew. It’s just that the twists began with something as ordinary as an unretrieved laptop.

Sometimes, the fuse for a major drama is just that ordinary a thing.

Later this year, Apple will also roll out a redesigned Siri that supports cross-app work and can call on users’ local iPhone data to produce personalized answers. With OpenAI’s new model just updated and its hardware team still being built, there’s another layer of legal obstacles on the road toward the IPO.

The courtroom battle may be the easiest part of the war between Apple and OpenAI.