Why Apple sued OpenAI: everything to know about the AI trade secrets lawsuit

Apple's decision to sue OpenAI marks one of the biggest legal confrontations yet in the artificial intelligence industry, transforming what was once a strategic partnership into an increasingly bitter rivalry.

The iPhone maker alleges that OpenAI systematically acquired Apple trade secrets to accelerate its ambitions in AI hardware, accusing the ChatGPT creator of using former employees, recruiting tactics, and supplier relationships to gain access to confidential information.

The lawsuit filed on Friday comes at a time when the battle in artificial intelligence is expanding beyond software models into consumer devices, making hardware the next major competitive frontier.

Here is a closer look at what Apple's lawsuit is about, why it matters, and what it could mean for the AI industry.

Why has Apple sued OpenAI?

Apple's complaint alleges that OpenAI orchestrated a broad campaign to obtain confidential information relating to Apple's unreleased technologies, manufacturing processes, and products.

According to the lawsuit, OpenAI relied heavily on former Apple employees and supplier relationships to accelerate development of its own hardware products.

"Recently, significant evidence has emerged suggesting individuals employed by OpenAI wrongfully took Apple's secret and confidential information regarding our unreleased technologies, processes, and products," an Apple spokesperson said.

OpenAI has denied the allegations.

"We have no interest in other companies' trade secrets," OpenAI spokesperson Drew Pusateri said.

"We remain focused on building innovative technology that empowers people everywhere."

Apple is seeking a court order preventing OpenAI from possessing or using its confidential information and wants the AI company to return any Apple intellectual property it may possess.

How did two partners become rivals?

The lawsuit represents a remarkable reversal in the relationship between the two companies.

In 2024, Apple announced a major partnership with OpenAI that integrated ChatGPT into iPhones, iPads, and Macs as part of its Apple Intelligence initiative.

That alliance, however, has steadily weakened.

Last month, Apple unveiled a revamped Siri powered by Google's Gemini AI model rather than ChatGPT, signalling a shift in its AI strategy.

Meanwhile, OpenAI has increasingly moved toward building its own consumer hardware ecosystem.

The turning point came when OpenAI agreed to acquire io Products, the hardware startup founded by legendary former Apple designer Jony Ive, in a deal valued at $6.4 billion.

The acquisition made clear that OpenAI intended to compete directly in hardware rather than simply provide AI software.

"OpenAI's nascent hardware business now rests on the shakiest of foundations, rotten to its core by its illegal reliance on misappropriated trade secrets," Apple said in its complaint.

Which former employees are at the centre of the case?

Much of Apple's complaint focuses on former executives who later joined OpenAI.

Among those named is Tang Tan, OpenAI's chief hardware officer and a former Apple vice president.

Apple alleges Tan directed Apple employees interviewing with OpenAI to disclose confidential information.

"He has directed job candidates still working for Apple to bring 'actual parts' from Apple to their interviews for 'show and tell' sessions in which he and his team at OpenAI can elicit still more Apple confidential information," Apple alleged.

The lawsuit also names former Apple employee Chang Liu, alleging he stole an Apple laptop before joining OpenAI.

According to the lawsuit, Liu allegedly left Apple with three key assets: a company-issued MacBook that was never returned, an ongoing relationship with an Apple employee who continued sharing internal information, and, most significantly, knowledge of a software flaw that gave him continued access to Apple's internal file servers.

"LOL, I found out I can access the (network storage), so funny," Liu allegedly wrote to his former Apple colleague, Alyssa Peng, Bloomberg reported.

Liu then used that access to download presentations, hardware designs, manufacturing details and testing procedures – while already working at OpenAI, Apple alleges.

According to Apple, OpenAI also coached departing employees on how to avoid Apple's internal security procedures when leaving the company.

The complaint notes that more than 400 former Apple employees now work at OpenAI.

"That OpenAI now employs people who were once entrusted with Apple's trade secrets does not entitle OpenAI to use that information to jumpstart its hardware efforts," Apple wrote.

What trade secrets does Apple claim were stolen?

The complaint goes beyond employee recruitment.

Apple alleges OpenAI sought confidential information from Apple's manufacturing partners and suppliers.

One allegation claims OpenAI asked a hardware supplier to reproduce a proprietary metal-finishing technique developed by Apple while leading the supplier to believe Apple had authorised the work.

The company also claims that Tang Tan carried confidential information relating to Apple suppliers after leaving the company.

Apple said it first raised concerns with OpenAI in February, writing to the company about what it believed was the misuse of confidential information.

According to the complaint, OpenAI did not respond.

Why is hardware becoming so important in AI?

The lawsuit reflects a broader shift underway in artificial intelligence.

While AI companies initially competed by building increasingly powerful language models, attention is now turning toward dedicated AI devices that could reduce dependence on smartphones.

OpenAI's acquisition of Jony Ive's startup signalled ambitions to create new categories of AI hardware.

For Apple, whose business remains centred around the iPhone, such efforts represent a potential long-term competitive threat.

"Apple sees OpenAI moving from partner to potential rival, while OpenAI is trying to reduce its dependence on the iPhone and build a direct relationship with consumers," PP Foresight analyst Paolo Pescatore told Reuters.

"Even if the allegations are not proven, the lawsuit could delay OpenAI's hardware ambitions and further weaken what is already becoming an increasingly fragile partnership."

Does Apple have a history of such lawsuits?

Yes.

Apple has previously taken legal action against former employees whom it believed misused confidential information.

In 2019, it sued former chief chip architect Gerard Williams III after he left to establish semiconductor startup Nuvia.

Apple eventually dropped that case in 2023.

The current lawsuit also recalls one of the company's most famous legal battles under Steve Jobs.

Jobs famously described Google's Android operating system as "a stolen product" and vowed to wage "thermonuclear war" against it.

According to accounts published at the time, Jobs said he would "spend every penny of Apple's $40 billion in the bank, to right this wrong."

Some observers see Apple's action against OpenAI as a similar attempt to slow an emerging competitor before it can reshape the consumer technology landscape.

What legal challenges does Apple face?

Legal experts say Apple has raised serious allegations, but proving them may not be straightforward.

Mark Lemley, a professor at Stanford Law School, said the case could become significant if Apple can demonstrate that confidential documents were actually taken and used.

"But if Apple's claims that the employees took confidential documents with them — and that OpenAI is using those documents — are true, that is a problem for OpenAI," Lemley said in a Reuters report.

At the same time, he noted that hiring former employees is not illegal in California, where employment laws have historically encouraged labour mobility.

Rutgers Law School professor Camilla Hrdy said the dispute could prove unusually complex because most previous AI trade-secret cases have focused on software rather than hardware.

"These trade secret lawsuits are frequently brought in the tech space, and we usually learn much, much more as the case develops. OpenAI is not a defendant that can't afford to defend itself," Hrdy said.

Regardless of the eventual outcome, the lawsuit underscores how the AI race is rapidly expanding beyond algorithms into hardware, manufacturing and intellectual property, making the competition between technology giants increasingly resemble the smartphone wars that defined the previous decade.