OpenAI is breaking Silicon Valley's unwritten code. That's why Apple is so angry.
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Jul 14, 2026, 5:00 AM ET
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For years, Silicon Valley has had a comfortable way of digesting disruption. OpenAI is refusing to play by these unspoken rules.
That's my takeaway after reviewing Apple's angry lawsuit against the AI startup, and coverage of the blockbuster complaint.
The usual Silicon Valley playbook goes something like this: engineers work on secret projects inside Big Tech, gain expertise, then sometimes leave to start companies of their own.
Most of these startups stay relatively small. They solve narrow technical problems that Apple, Google, Nvidia, or Amazon haven't prioritized. Many fail. The successful ones usually become suppliers, software partners, or acquisition targets. Either way, they end up strengthening the existing dominant players.
Less risk, more control
That arrangement suits Big Tech just fine. Let someone else take the technical and financial risk, then use the new technology once it's proven, or buy the startup to control the products and the people behind it.
Sometimes it's an acqui-hire after a startup fails. Sometimes it's a multibillion-dollar deal after it succeeds. Either way, the founders often end up back at Big Tech companies, the cycle begins again.
For example, I have a neighbor in Silicon Valley who developed a specialized semiconductor component at a startup. Apple acquired that business, and he spent about four years in Cupertino doing similar work that helped make AirPods successful.
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Kiva Systems followed a similar pattern. Amazon used technology from this robotics startup to make its warehouse more efficient. Then it acquired the business, and made it the foundation of Amazon's massive robotics operation.
Google took a similar approach with Noam Shazeer. He left to build the startup Character.ai before Google engineered a deal that brought the AI expert back to the search giant.
OpenAI's behavior blows this comfy, established playbook out the water in various ways. This is partly why the company upsets Big Tech companies — even those it previously partnered closely with, such as Microsoft and Apple, as Peter Kafka explained on Monday.
In other words, the Silicon Valley establishment loves to talk about disruption, but when they get truly disrupted themselves, the knives come out.
Sandberg's refusal
Sheryl Sandberg
Bloomberg/Getty Images
The last major example of this I can recall is Facebook, which, like OpenAI, was well-funded and refused to play by the usual rules of the industry. These rules mainly revolve around talent. Who gets to hire, retain, and essentially control, great technical minds — and the ideas held in these prodigious brains.
Back in the 2000s, Apple, Google, Intel, Pixar, Adobe, and Intuit entered into a secret pact that prevented the companies from directly soliciting each other's employees, according to a Justice Department lawsuit.
Facebook refused to take part, and instead went on a hiring spree, luring away hundreds of Googlers. The effort was partly overseen by Sheryl Sandberg, a former top advertising executive from Google. (You may have heard of her!).
Google — just like Apple today — was furious that it was losing talent to a scrappy startup that wasn't playing by Silicon Valley's rules.
"Fix this problem. Propose that you will substantially lower the rate at which you hire people from us," Google executive Jonathan Rosenberg told Sandberg in an email in August 2008. "Then make sure that happens."
But Sandberg refused, and Facebook went on to build the only digital advertising business that has really challenged Google ( so far), becoming a $1.7 trillion tech juggernaut in the process.
OpenAI won't stay in its lane
Jony Ive
Jamie McCarthy/Getty Images
Will OpenAI follow in Facebook's successful steps, or will it crash and burn? That's unclear right now. But the startup is certainly refusing to stay in its lane when it comes to Silicon Valley talent.
The scale of the departures from Apple to OpenAI are astounding. I hadn't realized, until Apple told the world in its lawsuit on Friday that more than 400 of its employees work there now. That's not a small hardware startup.
Some of the Apple talent OpenAI has brought on is unusually senior. Jony Ive is the famous iPhone designer, and Tang Tan spent a quarter of a century at Apple overseeing the design of the iPhone, Apple Watch, and iPod. These are not mid-level technical engineers who dabble in niche projects. They are either visionaries and/or top-level execs who ran big teams at Apple and know how to bring huge projects to life.
"Apple hasn't really had competition for its best hardware and operations people until now, " tech blogger Ben Thompson wrote on Monday. "From what I understand, there has never before been a mass exodus from Apple for a competitor like has happened in this case, and I don't think Apple likes that very much!"
A threat to Apple
Related to this: OpenAI isn't trying to fix some small technical thing that Apple is too busy to focus on. This startup wants to either directly challenge the iPhone, or completely replace this device as the go-to gadget of the AI era.
OpenAI hinted at this ambition in its response to Apple's complaints, saying it has "no interest in other companies' trade secrets."
Instead of helping Apple from the sidelines, OpenAI is going for the jugular. That's a huge threat.
Thompson wrote on Monday that Apple finally has to "actually wrestle with the possibility that AI is such a paradigm shift that it actually might threaten the iPhone."
And OpenAI is ridiculously well funded, so it's beyond being easily acquired to bring talent back to Apple. The startup raised more than $100 billion earlier this year. Even if the valuation collapses 70% from here, it would cost about $100 billion to acquire. Even for Apple, that would be a pricey acqui-hire!
To me, all this explains the intensity (or desperation?) of Apple's lawsuit against OpenAI.
Normally, if a small startup is getting too successful, or too big for its britches, in Silicon Valley, it can be easily squashed, or just acquired. This time, OpenAI is too big, too well-funded, and too ambitious to swat away or subsume easily.
Sign up for BI's Tech Memo newsletter here . Reach out to me via email at abarr@businessinsider.com .
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Alistair Barr is the author of Business Insider's Tech Memo newsletter. Sign up here. Before that, he was BI's Global Tech Editor and the Big Tech team leader at Bloomberg, following a reporting career at The Wall Street Journal, USA Today, Reuters, and MarketWatch. Alistair won a Gerald Loeb Award in 2007 for coverage of short selling and was a finalist in 2013 for scoops on the Facebook IPO. More recently, he won a 2024 San Francisco Press Club award for commentary. Got a tip? Reach out using the secure messaging app Signal (+1 415-341-4927) or via email on abarr@businessinsider.com.ExpertiseAlistair oversees all things Big Tech, along with startups and venture capital. He writes analysis and columns about topics including generative AI, large language models, cloud computing, semiconductors, online search, e-commerce, EVs, robotics, and autonomous vehicles.Popular Stories_Artificial Intelligence:_It's getting harder to make big leaps at the frontier of AIOpenAI's AI-adjusted earnings numbers have echoes of Groupon and WeWorkDeath by LLM: Stack Overflow's decline, and its plan to survive, shows the future of free online data in an AI worldCloud computing:Amazon dominated the first cloud era. The AI boom has kicked off Cloud 2.0, and the company doesn't have a head start this time.In cloud, there's AI (which is hot) and everything else (which is not)Chips:Why Intel is still so important: Real countries have fabsApple's made-in-the-USA chips signal a turnaround for the US's big semiconductor betEVs and Tesla:Tesla's AI supercomputer has a Silicon Valley town rushing to meet surging electricity demandTesla's Cybertruck is outselling almost every other EV in the USOnline Search:Google is losing its status as a verbA simple way to fix search: Bright pink ads
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