Apple imposes price cuts on AI apps, may make $360 million a year from OpenAI's creation

Image credit : Search Engine Journal Apple may not be the industry leader in generative AI, but thanks to its monopoly on the app market, it is able to profit from others' successes. An iPhone app for ChatGPT that was released by OpenAI last week swiftly rose to the top of the App Store. In the free app category as of Friday, ChatGPT was at the top, and Apple was marketing it as a "must-have" app under the "Essentials" subcategory. Users can purchase a $20 monthly subscription to ChatGPT Plus from within the app, which gives quicker response times and first access to new features. Cupertino is taking its customary 30% cut because OpenAI uses Apple's in-app purchase system rather than sending visitors to a website where they can subscribe.

"Apple is getting their 30% tax," as Bernstein tech analysts put it in a note to investors.

[caption id="attachment_170224" align="aligncenter" width="1200"] Image credit : Computerworld[/caption] Is there a greater example of a technological monopoly? Apple is falling behind in AI and has made virtually little in the way of contributions to the field's open research. And yet, despite essentially doing nothing, it will undoubtedly earn hundreds of millions of dollars a year from this technology. In a fictitious scenario, ChatGPT Plus would generate almost $1.2 billion in annual income if it managed to sign up 5 million additional iOS users. By taking 30% of that, Apple would earn $360 million annually from the development of OpenAI.

Tim Cook said on Apple's recent earnings call that the company will "weave" AI into its products, but cautioned that it would be "deliberate and thoughtful" in how it does so. "There's a number of issues that need to be sorted," he added. Apple has also told employees to limit their use of ChatGPT out of fear it will collect confidential information, The Wall Street Journal reported.

Also read : China resorts to AI to gain military dominance in future wars

None of that prevents Apple from making money off subscription sales by making the service available to consumers through its App Store. As iPhone sales have slowed in recent years, Apple's services division, which includes revenue from App Store subscriptions, has been a key growth engine for the corporation. A record was set in the most recent quarter's revenue from services, which accounts for some of Apple's highest profit margins.