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Apple Takes Its 30% Bite From AI Innovation, Costing OpenAI Millions

The AI revolution is in full swing, and OpenAI’s ChatGPT app has taken center stage, captivating the crowd with its impressive capabilities. However, a familiar tech giant silently accumulates substantial profits amidst the excitement and applause. Apple may not be at the forefront of generative AI, but it has found a way to carve out a significant portion of the AI pie.

OpenAI’s collaboration with Apple reached new heights with releasing an iPhone app for ChatGPT. The app soared to the top of the App Store charts quickly, claiming the coveted number-one spot in the free apps category. This accomplishment was further accentuated by Apple’s endorsement, classifying ChatGPT as a “must-have” app under its “Essentials” category.

Nevertheless, Apple’s well-known 30% cut, commonly called the “Apple Tax,” on all iOS subscriptions has faced substantial criticism. Particularly among crypto users, in-app NFT purchases became costlier. Despite the controversy, OpenAI decided to comply with Apple’s terms, opting for the native in-app purchasing system instead of establishing a separate subscription website.

Consequently, for every ChatGPT Plus subscription sold for $20 per month, Apple retains $6. Apple’s CEO, Tim Cook, has expressed his commitment to integrating AI into Apple’s products while simultaneously ensuring profitability. Despite underlying concerns about data privacy, ChatGPT remains available on the App Store, contributing significantly to Apple’s service revenue, which recently reached a record-breaking $20.8 billion.

However, Apple’s 30% fee has landed the company in legal trouble. The U.S. federal appeals court ruled that Apple violated California’s Unfair Competition Law by prohibiting alternative payment methods. Nevertheless, OpenAI seems to be sticking with Apple’s built-in payment processor, likely due to its seamless user experience.

In a recent development, Apple emerged victorious in an antitrust case filed by Epic Games. Still, new legislation in the European Union may compel the company to allow third-party app stores, aiming to level the playing field for developers.

This unfolding narrative underscores the intricate dance between AI pioneers, big tech companies, and regulatory bodies. Apple appears to have the upper hand, leveraging the innovative work of others to bolster its own profits, even amid controversies.

One thing is sure: the AI revolution is just beginning, and everyone is scrambling to capitalize on it. As the landscape evolves, it remains to be seen how Apple and other tech giants will navigate the complex intersection of AI, profits, and regulatory frameworks.

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