CNBC's Steve Kovach joins 'Squawk Box' to discuss the latest news from Apple.

Cupertino

The release of Open AI's ChatGPT has accelerated the development of artificial intelligence and warnings about its impact on society.

Rise of AI

The latest Apple iPhone software update is set to integrate ChatGPT directly into iOS, giving Siri the capability to interact with this advanced AI model. This partnership, announced five months ago at Apple's Worldwide Developers Conference, marks a significant move in Apple's AI advancements. However, Apple is not paying OpenAI for this collaboration. Instead, OpenAI benefits from exposure to Apple's vast user base, with the potential to reach over a billion iPhone users, aiding in the growth of its paid services and supporting its computing power costs. 

Presently, there are 300 million ChatGPT users, according to Sam Altman, CEO of OpenAI. Apple perceives ChatGPT as a leading AI model, though Apple's AI model will continue to be used for many tasks. If Siri is unable to fulfill a user's request, ChatGPT will be available as an alternative. Other AI models, like Google's Gemini, may be incorporated into future iPhone updates. Meanwhile, Microsoft also stands to benefit from this venture, as ChatGPT's operations run on Microsoft's Azure Cloud. 

The integration of ChatGPT into Apple's ecosystem has raised privacy considerations. Users will receive warnings about data privacy when opting to use ChatGPT, as it operates outside Apple's ecosystem, specifically on Microsoft's Azure platform. Those concerned can choose not to use the service or avoid logging into ChatGPT. Presently, this move signifies a transition for Apple beyond its proprietary systems and a shift in its longstanding privacy commitment.



iPhone's ChatGPT upgrade: Here's what to know

The Apple's latest iPhone software update is expected to launch as soon as today, and we'll finally let Siri talk with ChatGPT. Our own Steve Kovach joins us right now with the details. What do you think? Yeah, this is a big launch, and this is ChatGPT, like you said, coming to iPhone, built directly into that iOS software. By the way, this is that partnership announced five months ago, back in June at Apple's Worldwide Developers Conference, and so much has happened in the AI space, especially with OpenAI. Since then, OpenAI, of course, became a $157 billion company after its latest fundraise, but also shed many top execs and co-founders like CTO Mira Murati, and we're showing you a bunch of others there who have left in recent months, not to mention facing new legal threats from Elon Musk and his rival AI company, XAI. Now, according to Bloomberg, Apple is not paying OpenAI for this partnership, but OpenAI can still benefit in a lot of meaningful ways. This gives OpenAI exposure to tens of millions of iPhone users when the software launches, and one day, once everyone upgrades their devices to ones that are compatible with Apple Intelligence, that's going to grow to over a billion users just on the iPhone side alone, and that, of course, helps grow its paid product and helps for those enormous costs that it's paying right now for compute power. Now, Sam Altman told Andrew last week at the Dilbert Conference there are already 300 million ChatGPT users right now. On the Apple side of things, here's what they get out of it. They say ChatGPT is the best of the AI models out there, even though a lot of what you do with Apple Intelligence on your phone, that's going to be Apple's own AI model, but if you stump Siri or ask it a question it doesn't know, you're going to have the option to use ChatGPT instead. Apple said other models are eventually going to be baked into the iPhone, mentioning Google's Gemini as an example, though it sounds like Facebook might not make it into the party. By the way, Microsoft is a quiet winner in this partnership. ChatGPT, because of their relationship with Microsoft, runs all their queries on the Microsoft Azure Cloud. Satya Nadella, the CEO of Microsoft, told Arjan Fort last month Microsoft is going to benefit from all these iPhone users starting to use ChatGPT. And one thing to watch for going into next year, whether or not China approves Apple Intelligence, ChatGPT, of course, does not operate there, and Apple still doesn't have government approval for its own artificial intelligence model. Lots of talk about partnerships with the search giant over there, Baidu. Now, ChatGPT is important. This is a big milestone for Apple and OpenAI, but the most important Apple Intelligence features, those aren't going to come until next year. That includes more upgrades to Siri, and the big one, this is the one everyone's paying attention to, controlling your third-party apps with Apple Intelligence. We haven't even gotten a whiff of what that looks like yet. Steve, if I agree to the software upgrade from Apple, what am I giving away in terms of information that ChatGPT may be picking up from me? You get a warning, so... I get a warning that what? All of my information's going to them? That you're leaving the Apple ecosystem, and I forget the exact language, but it says effectively you're leaving Apple, we can't guarantee your privacy, and it doesn't say Microsoft, but it is running on Microsoft's mostly on Azure Cloud. So if I don't want to do that, I should say no to every upgrade that they're telling me? You can switch it off, you don't have to use it. Also, you don't have to be logged into ChatGPT. If you pay for ChatGPT right now, Becky, that $20 a month plan, you can just sign in and get it, or you can pay through iPhone and get it, too. That's huge for... But the free version means I'm giving access to that? Exactly. You're giving access to Microsoft and OpenAI. Just like if you use the ChatGPT app on your phone now, it's similar what you're giving access to. It's not... Apple's not guaranteeing it's locked down in that privacy bubble. That's the first time that I've got an Apple update that basically takes me outside the system. No, Google does. I mean, yeah, when you do a Google search in Safari, that takes you outside the Apple ecosystem as well.

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Washington

Middle East Conflict

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Ukraine Invasion

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Tehran

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Kyiv

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Tamil Nadu

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Beirut

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Manhattan

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Dallas

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Karur

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Toronto

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