Microsoft Loses Influence Over OpenAI’s New “Apple iPhone Killer” Consumer Device Decisions

OpenAI has joined forces with renowned Apple designer Jony Ive to develop a groundbreaking consumer AI device that could potentially make smartphones obsolete, threatening Apple’s stronghold on the iPhone market.

Recent developments have provided compelling evidence that OpenAI is actively pursuing this innovative product. Notably, Microsoft will no longer retain any influence over this forthcoming “Apple iPhone killer.”

Strategic Renegotiation Between OpenAI and Microsoft

MSFT-OAI define their next chapter:-MSFT gets ~27% shares of OAI post-conversion on fully diluted basis-AGI will be verified by independent expert panel (who gets to do this?!)-MSFT has IP rights for models and products through 2032, include models post-AGI w/ guardrails-MI… pic.twitter.com/zg50fRZ4zd

— Shanu Mathew (@ShanuMathew93) October 28, 2025

According to a recent announcement, OpenAI and Microsoft have successfully renegotiated their partnership, leading to significant changes:

Assessment of OpenAI’s Artificial General Intelligence (AGI) will now be conducted by an independent expert panel.
Microsoft’s intellectual property claims concerning OpenAI’s technologies have been formalized.
OpenAI is now allowed to collaborate with third-party partners for certain product developments.
Microsoft retains the ability to independently pursue AGI.
OpenAI is required to share revenue with Microsoft until AGI status is confirmed by the designated panel.
OpenAI will commit to purchasing $250 billion worth of Azure services from Microsoft, who cannot refuse to offer computing resources.

Crucially, the revised terms indicate:

“Microsoft’s IP rights now exclude OpenAI’s consumer hardware.”

This clause allows OpenAI to develop its consumer devices—including the highly anticipated collaboration with Jony Ive—without Microsoft’s interference. In a significant move, OpenAI acquired Ive’s AI startup, io, for $6.4 billion in May.

Recent reports indicate that OpenAI has expanded its team by hiring around 20 former Apple employees, inclusive of designers, hardware engineers, and user interface experts, to contribute to this revolutionary device.

Among the notable hires are Matt Theobald, an expert in manufacturing design, and Cyrus Daniel Irani, who previously led human interface design at Apple.

Key Features of OpenAI’s Upcoming Consumer AI Device

The device is anticipated to be a screenless, pocket-sized gadget.
It will feature contextual awareness through a variety of sensors, including cameras and microphones.
OpenAI’s customized AI models can be operated locally, with additional cloud support for processing-intensive tasks.
The device is designed for seamless communication with other devices, similar to existing smartphones.
It will not take the form of a traditional wearable device.

As we look to the future, OpenAI’s innovations in consumer AI technology promise to redefine how we interact with digital devices, potentially leading to a new era beyond traditional smartphones.

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