Elon Musk threatens Apple ban over OpenAI integration

By Glenn Dyer | More Articles by Glenn Dyer

Elon Musk wants shareholders in Tesla to approve his controversial multi-billion dollar share deal at Thursday’s annual meeting. To show that he has their best interests at heart, he says he will ban Apple products from Tesla cars and other products if the phone giant integrates OpenAI’s technology into its iPhones.

Such a ban, if it eventuates (and many of Musk’s threats fade away), would cost Tesla sales, revenues, and earnings, potentially undermining the value of the company’s listed shares.

More and more shareholders in Tesla are uneasy about Musk's growing conflicts of interest between his involvement in Tesla and other companies, such as SpaceX and a company promoting brain implants and robots, as well as his own AI technology.

Monday saw another big shareholder oppose Tesla's huge share award to Musk, originally awarded in 2018 but nixed by a Delaware court in January.

After that decision, Tesla’s board decided to get Thursday's annual meeting to vote on re-awarding the shares to Musk, sparking a growing wave of opposition. Now another big shareholder opposes Musk’s share package.

The Norwegian sovereign wealth fund has already said it will oppose the deal, and Monday saw CalPERS, America’s biggest pension fund, announce its intention to vote against the share deal.

CalPERS owns 9.5 million Tesla shares and is a top 30 shareholder. It is usually a leader among American pension funds. Musk’s tweet ban warning for Apple overshadowed the CalPERS announcement.

Musk could have announced his ban at the weekend before Monday’s song and dance routine from Apple at its worldwide developers conference, which is being held this week.

Apple announced it would be doing that—plus a number of other deals with AI companies for its products—at a developers conference which started Monday.

Musk, who is trying to develop a rival AI product to OpenAI (where he was a co-founder), took to Twitter (his loss-making social media platform) to make his ban threat to Apple.

In Apple’s announcement, it said that by integrating OpenAI technology into its iPhones, so that when users are speaking to Siri, it will be able to hand off some queries to ChatGPT, OpenAI’s large language model. Mr. Musk said that such an update would be an “unacceptable security violation”.

“If Apple integrates OpenAI at the OS level, then Apple devices will be banned at my companies. That is an unacceptable security violation,” he wrote on Twitter.

“And visitors will have to check their Apple devices at the door, where they will be stored in a Faraday cage,” he said. He’ll ban Apple devices at his companies if the iPhone maker integrates OpenAI at the OS level, the Tesla CEO said in the post on Monday. Mr. Musk’s ban would presumably affect SpaceX and Tesla, in addition to X.

Apple had earlier revealed that the feature would be released later this year. OpenAI confirmed that its technology would be broadly integrated into the iPhone operating system.

Both OpenAI and Apple stressed that it would include privacy protections. “Requests are not stored by OpenAI, and users’ IP addresses are obscured,” OpenAI said in its announcement.

The integration will mean that Siri requests can also be sent to ChatGPT. It will be able to hand off questions—as well as documents and photos—for help. It will also be available within a new Apple system called “Writing Tools”, which allows users to generate content for their writing or have their documents rewritten in fewer words or in different styles.

Apple will also integrate OpenAI’s image generation technologies so that they can create illustrations to sit alongside their documents. All of the features are part of a suite of features called “Apple Intelligence”, which will integrate Apple and OpenAI into one offering.

US analysts say Musk’s threat won’t withstand legal or technical challenges from individuals, rival companies, or regulators.

Sales of Tesla EVs are already falling around the world, especially in China. If he tries to ban Apple from new vehicle sales (and how will he ban it retrospectively for Tesla’s already sold with the Apple Play feature installed), it will just add to pressures on sales, prices, cash flow, and earnings.

But this sounds more like a continuation of the argy-bargy between Musk and OpenAI.

They have a long and increasingly fractious history. He was one of the founders of the company when it launched at the end of 2015 but has become gradually more hostile towards it, criticizing it for failing to live up to its founding principles (in his view).

He has since sued the company and its CEO and former friend, Sam Altman, accusing them of prioritizing profits and failing to live up to its original mission. In response, OpenAI said that it rejected all of Mr. Musk’s claims.

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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