Apple sued OpenAI for "rotten to the core" - heavy keywords in a trade secrets war

In a 41-page lawsuit filed in federal court on July 10, 2026, Apple used a phrase that is rarely seen in legal documents of a notoriously tight-lipped corporation: "rotten to its core", which roughly translates as rotten to the core. That's how Apple describes OpenAI's fledgling artificial intelligence (AI) hardware business, which the $4.6 trillion company alleges was built by illegally exploiting its own trade secrets. This is no longer simply a legal dispute, it is the tipping point of a relationship that was once cooperative, then fractured, and now confronts directly on the very front that both want to dominate: post-smartphone devices.

What does the lawsuit say?

Apple accused two of its former employees, now working at OpenAI, of systematically stealing security data: including information about unreleased hardware products, technical specifications, and even a list of suppliers and partners in Apple's supply chain. Notably, the lawsuit not only targets these two individuals but also directly lists OpenAI as a defendant, along with io Products, the hardware design company that OpenAI acquired last year, co-founded by Apple's legendary former design director, Jony Ive. The words in the lawsuit show the seriousness that Apple wants to convey: "At every level, from regular technical staff to Hardware Director, and in coordination with business partners, OpenAI stole Apple's trade secrets and confidential information." This is the language of a company trying to demonstrate that the breach was not the individual fault of a few departing employees, but was part of an organized strategy. OpenAI briefly countered in a statement sent to Fortune, saying that they "have no interest in other companies' trade secrets" and are still focused on "building innovative technology that serves people."

From partners to competitors

To understand why this lawsuit attracted so much attention, it is necessary to look back at the relationship between the two companies. Apple and OpenAI were partners, ChatGPT was integrated into Apple's software platforms, and the Siri assistant was partly based on OpenAI's technology. But that relationship faded over time, and in January 2026, Apple announced a shift to partnering with Google for Apple Intelligence development efforts, almost a public slap to the former partner.

Apple and OpenAI used to cooperate, but the relationship is now broken At the same time, OpenAI is building its own ambitions in the hardware segment. In 2025, they spent a huge amount of money to acquire io Products, the company co-founded by Jony Ive after leaving Apple. The fact that someone who shaped the entire design language of the iPhone, MacBook, and Apple Watch now leads the hardware side of a direct competitor is a dramatic enough story in itself. But when two other former Apple employees also moved to OpenAI and took with them, allegedly, information that shouldn't have left Cupertino, the story turned from "competition for talent" to "legal dispute."

The line between learning and stealing

This is the hardest part of any trade secret lawsuit in the technology industry: US law allows employees to bring their accumulated skills, experience and general knowledge with them when changing jobs, which is a basic right to freedom of labor. But the law also prohibits bringing in specific confidential information, like unpublished technical specifications or supplier lists, which are protected by non-disclosure agreements that most tech employees sign when they join the company. The line between the two is often quite blurred, and American courts often have to consider whether the allegedly stolen information was truly “confidential,” that is, not easily reproducible from common industry knowledge, and whether the accused party actually used it to create a specific competitive advantage. Apple, alleging that the stolen information included "details of suppliers and contractors in the supply chain," is trying to build an argument that this is not common industry knowledge, but rather Apple's own specific operational assets that would have been possible only by having worked directly on their systems.

The "soulful" device was born from a controversial foundation

What makes this lawsuit especially notable for technology users, not just lawyers, is that it broke out just as details about OpenAI's first hardware product began to emerge. According to Bloomberg sources cited by Fortune on July 15, the device is described as a screenless smart speaker, designed to be "a new form of home computer for the AI ​​era." It has mechanical parts that move on their own: not just to perform a function, but to create the feeling that the device is "alive" and not simply responding to user commands. The device will use ChatGPT to answer questions, control devices in the home, play content, and become more personalized over time by tapping into user data or information the user provides to it.

This comes at a time when OpenAI is expected to launch a screenless smart speaker device

The post-smartphone race isn't just about two players

More broadly, this lawsuit is a slice of a much larger race: who will reshape the way people interact with technology after the smartphone era. Sam Altman once said on the OpenAI podcast that “computers, software and hardware, the way we currently envision computers, were designed for a world without AI,” and now everything needs to be redesigned. But OpenAI is not the only player pursuing that dream. Google has just launched the Gemini-integrated Google Home speaker with a response that is considered more natural but still leaves many "confused" moments in interaction. Amazon is also integrating AI deeper into its existing line of smart speakers. And the lesson from Humane, the company that launched the popular AI pin in 2024 only to be acquired by HP and shut down the product just over a year later due to poor performance and overheating, remains as a reminder that ambitious computer redesigns do not always win in the real market, no matter who is behind the drawing.

Humane AI Battery, a living proof of the challenges that those participating in the post-smartphone race will face Apple's lawsuit, therefore, is not just about reclaiming trade secrets. It can be seen as an attempt, possibly both legal and strategic in communication, to sow doubt into the very foundation of the competitor even before the product launches. As for users, the real question is not who is right and who is wrong in the courtroom, but rather: as the technology industry races to create more "soulful" devices, what people really need is a machine that pretends to be alive, or just a tool that does its job well without pretending.