A new twist in Apple's deal with OpenAI

"This would be a smart move for Cupertino given how important OpenAI is to the broader AI vision in Apple," Wedbush analyst Dan Ives said.

• Apple gets an observer role on OpenAI's board as part of the companies' partnership, per Bloomberg.
• The arrangement raises Apple to Microsoft's level within the AI startup, according to the outlet.
• Phil Schiller, head of Apple's app store, was reportedly picked for the position.

Apple scored a board observer seat as part of its landmark deal with the AI giant, Bloomberg reported Tuesday, citing people familiar with the matter.

According to the outlet, the arrangement puts Apple on equal footing with OpenAI's biggest backer, Microsoft, raising new questions about how the competitors will coexist on OpenAI's board.

Details of the new arrangement follow Apple's announcement last month that it would integrate OpenAI's ChatGPT with future devices as part of a larger AI push at the tech company. Users who prefer not to use ChatGT will be able to opt-out of the features, Business Insider previously reported.

Phil Schiller, head of Apple's app store and former marketing chief, was picked for the board position, Bloomberg reported. Schiller will serve in an observer role, meaning he won't have voting powers, but he will be able to sit in on OpenAI meetings, giving Apple key insight into the inner workings of the AI company, according to the outlet.

Neither Apple nor OpenAI immediately responded to a request for comment from Business Insider.

"This would be a smart move for Cupertino given how important OpenAI is to the broader AI vision in Apple," Wedbush analyst Dan Ives told Business Insider.

The arrangement, the details of which are still in flux, is set to start later this year, and Schiller has not attended any meetings yet, according to the Bloomberg report.

Microsoft has long been OpenAI's largest backer and a key business partner, having invested billions of dollars into the AI company. Ahead of the Apple-OpenAI integration announcement, Microsoft CEO Satya Nadella met with OpenAI CEO Sam Altman to discuss concerns about the forthcoming Apple deal, The Information reported in May.

However, the Apple-OpenAI partnership could ultimately benefit Microsoft, too, Venture Beat reported last month. The deal could offer Microsoft Trojan horse-like insight into Apple, one of its key competitors, and pave the way for friendlier relationships between the two rivals.

It is not uncommon for board observers to leave meetings where sensitive information is being discussed — something Microsoft could ask Apple to do or vice versa, Bloomberg reported.

The Apple partnership marked a massive win for OpenAI, coming at a key time for Altman after mounting scandals at the company, including a company coup, growing concerns about safe AI, and a brush-up with Scarlett Johansson over the use of her likeness.