OpenAI engineer’s ‘LOL’ moment set stage for legal fight with Apple

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Tan and Ive helped found io Products, a startup that OpenAI acquired last year for US$6.5 billion. They teamed up on the venture with Evans Hankey, Ive’s successor as Apple’s industrial design chief, and Scott Cannon, a former manufacturing manager who left the tech giant in 2010.

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Ternus and other Apple executives.

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Apple was quickly alarmed by OpenAI’s recruiting drive, which included poaching senior hardware and design leaders and ravaging several teams across its engineering organizations.

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The practice continued as recently as June, when OpenAI lured away Apple’s smart glasses chief. That executive, Paul Meade, was quickly shown the door at Apple and not given the opportunity to stay on for a transition period, according to people with knowledge of the matter.

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To Apple, the talent search looked like an attempt to recreate the iPhone maker’s product-development machine inside OpenAI. “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 Friday.

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Tan was famous for taking risks at Apple and “flying very close to the sun” during his 25-year career, according to someone who worked with him. “Tang is well known for moving fast, playing fast and loose and breaking things,” said the person, who asked not to be identified while discussing former colleagues.

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He made his name leading the design of early Mac laptops and iPods before taking charge of the product design function for the original iPhone. Tan oversaw the entire iPhone design team by 2011 and then led the Apple Watch design work. By the time he left, he was one of Apple’s top executives.

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OpenAI, meanwhile, had committed billions of dollars to its hardware effort and was racing toward an initial public offering. Nevertheless, the startup had little to show beyond concepts and early prototypes when io was acquired, according to people with knowledge of the matter. At the time, the company was still scrambling to settle on a compelling product strategy, they said.

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These days, OpenAI is working on an AI-powered smartphone replacement, though its first product may be something simpler, the people said. The company has explored concepts ranging from earbuds and smart glasses to AI-enhanced speakers. Apple, for its part, is developing a new lineup of home devices, camera-equipped AirPods, glasses and other wearables.

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The Apple Fifth Avenue store Photographer: Michael Nagle/Bloomberg

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Apple said that it tried to resolve the dispute before filing the suit, including by contacting the AI company in February. It said it told OpenAI of its concern that confidential Apple information had made its way there and asked the company to both investigate the issue and stop it from happening. The startup never responded, Apple alleges.

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The key OpenAI employees named in the lawsuit, including Tan, didn’t respond to requests for comment.

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The lawsuit also underscores Tan’s strained relationship with John Ternus, his former boss and Apple’s incoming chief executive officer. Most of OpenAI’s Apple recruits came from Ternus’ hardware engineering division, and some designers had backed Tan over Ternus for the top hardware job in 2021.

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Tan, who Apple portrays as orchestrating the effort to obtain confidential information, is alleged to have used interviews with prospective employees as information-gathering sessions about upcoming Apple products.

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In one instance, Apple says an employee acquired information about a project just hours before meeting with Tan for a job interview. “Then, in the interview, Mr. Tan solicited more information about that same Apple project. This has become an established pattern,” according to the lawsuit.

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Once employees sign on to work at OpenAI, they are encouraged to send information before resigning from their Apple devices to their personal email accounts to use later at the AI startup, the iPhone maker alleges. OpenAI, the complaint says, distributes “a checklist that Tang put together” that helps new employees evade detection from Apple’s security teams.

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Apple also alleges that Tan went as far as asking prospective hires to bring prototypes to job interviews. This included batteries, logic boards and other components, the complaint says.

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At least one Apple worker who applied to OpenAI was concerned about the practice, saying he was “surprised people have brought” unreleased hardware to job interviews. He said he “didn’t know we could take those from the office.” In many cases, they couldn’t.

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