Published - May 23nd, 2023 @ 10:00 AM (GMT+2 )

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Despite Apple's (NASDAQ:AAPL) limited presence in generative AI, its dominance in the app market allows it to capitalize on the success of others. Apple's recent tax on AI inventions has raised concerns and generated debates within the tech industry. This move is expected to cost OpenAI and other companies hundreds of millions of dollars annually.

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Apple's App Store Dominance
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As of Friday, OpenAI's ChatGPT app skyrocketed to the top of the App Store, becoming the number one free app. Apple's promotion of ChatGPT as a "must-have" app under its "Essentials" category further amplified its visibility.

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In-App Subscription Model
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ChatGPT users can subscribe to ChatGPT Plus, a premium version offering faster response times and priority access to new features. Apple's in-app purchasing system enables OpenAI to offer subscriptions directly within the app, leading to Apple's standard 30% revenue cut.

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Tech Monopoly Concerns

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Apple's involvement in AI raises questions about its monopoly power. Despite lagging in AI advancements and contributing minimally to public research, Apple stands to profit significantly from OpenAI's technology without actively participating in its development.
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Revenue Potential
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A hypothetical scenario where ChatGPT Plus gains 10 million new subscribers on iOS translates to approximately $2.4 billion in annual revenue. Apple's 30% share amounts to a staggering $720 million per year from OpenAI alone.

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Privacy Concerns and Profit Margins

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While Apple's CEO, Tim Cook, emphasizes the deliberate integration of AI into its products, concerns about data privacy persist. Despite such reservations, Apple continues to offer ChatGPT through its App Store, leveraging subscription sales to bolster its services business. In the latest quarter, Apple's services revenue surpassed $20 billion, highlighting its growth potential and profitability.

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Conclusion
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Apple's tax on AI inventions showcases the challenges its app market dominance poses and raises valid concerns about its role in the AI landscape. As OpenAI faces substantial financial implications, the debate surrounding tech monopolies and privacy issues intensifies. Nonetheless, Apple's services business thrives, generating significant revenue while reinforcing its own AI development endeavors.

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