Apple Poised To Get OpenAI Board Observer Role As Part Of AI Pact

Apple executive Phil Schiller, center, during an event at the company’s campus in Cupertino, California.

(Bloomberg) -- Apple Inc. will get an observer role on OpenAI's board as part of a landmark agreement announced last month, further tightening ties between the once-unlikely partners.

Phil Schiller, the head of Apple's App Store and its former marketing chief, was chosen for the position, according to people familiar with the situation. As a board observer, he won't be serving as a full-fledged director, said the people, who asked not to be identified because the matter isn't public.

The move follows Apple's announcement in June that it would offer ChatGPT in the iPhone, iPad and Mac as part of a suite of artificial intelligence features. The board arrangement will take effect later this year, and Schiller hasn't yet attended any meetings, according to the people. Details of the situation could still change.

The board observer role will put Apple on par with Microsoft Corp., OpenAI's biggest backer and its main AI technology provider. The job allows someone to attend board meetings without being able to vote or exercise other director powers. Observers, however, do gain insights into how decisions are made at the company.

Representatives for Apple and OpenAI declined to comment.

Having Microsoft and Apple sit in on board meetings could create complications for the tech giants, which have been rivals and partners over the decades. Some OpenAI board meetings will likely discuss future AI initiatives between OpenAI and Microsoft — deliberations that the latter company may want Schiller excluded from. Board observers often do oblige and exit meetings during discussions that are seen as sensitive.

Though Schiller doesn't lead Apple's artificial intelligence initiatives, his veteran role as a steward of the company's brand makes him well-suited to the observer job. The 64-year-old stepped down as head of marketing in 2020, and his current title is Apple Fellow. In addition to overseeing the App Store, he still manages the company's product launch events. Outside of Apple, he's a director at medical technology company Illumina Inc.

With the OpenAI partnership, Apple is teaming up with the biggest and most influential AI startup — but also a business known for controversy and upheaval. OpenAI Chief Executive Officer Sam Altman was briefly ousted last year over concerns that he wasn't candid enough with the board. The company also has drawn criticism for downplaying AI safety fears and using a digital voice that sounded similar to actress Scarlett Johansson without an agreement.

The OpenAI integration is one component of Apple's overall AI strategy, which also includes in-house features. Its technology — called Apple Intelligence — summarizes articles and notifications, creates custom emojis and images, and transcribes voice memos. The effort also includes a revamped version of Apple's Siri digital assistant, but many of those enhancements won't arrive until next year.

Apple's partnership with OpenAI isn't a financial arrangement, at least for now. Instead of money changing hands, OpenAI is getting access to hundreds of millions of potential users. For its part, Apple gains a chatbot feature that many consumers are clamoring for. Users also will be able to access a paid version of ChatGPT on Apple devices, and that could generate App Store fees for the iPhone maker.

Apple remains in discussions with Alphabet Inc.'s Google and startup Anthropic about offering additional chatbots to customers. It's also discussing potential agreements with Baidu Inc. and Alibaba Group Holding Ltd. to bring its AI features to devices in China. Apple Intelligence will launch initially in American English before an international rollout.

Top Apple executives frequently serve as directors of other companies, but joining the board of a high-profile partner is rare. Apple, did, however, briefly hold a board seat at DiDi Global Inc. after investing $1 billion in the China-based Uber rival.

--With assistance from Shirin Ghaffary.

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