California’s biggest utility sees power demand doubling by 2040, driven by artificial intelligence, electric cars and other efforts to electrify more of the economy, according to PG&E Corp.’s top executive.

PG&E is equipped to meet that surge in demand without significantly adding to its fleet of power plants, Chief Executive Officer Patti Poppe said Friday in an interview on Bloomberg Television. That’s because the utility’s system isn’t running at its full potential.

“Our grid today is underutilized,” she said. “We built the grid big years ago, and now we get to utilize it.”

Utilization rates on PG&E’s grid are currently at around 45% and Poppe said she sees that growing to as much as 80%. While there will be “some new generation,” the CEO said better use of existing assets will be key to delivering more power without driving up costs.

Shares of PG&E fell 0.9% at 10:46 a.m. in New York. The stock has risen 1% this year.

Other parts of the US are also projecting massive increases in power demand, with the head of the grid operator in Texas estimating this week that power demand there would nearly double by 2030. A number of US power companies have also dramatically increased their projections of demand, though unlike PG&E, other companies are planning to build new plants.

Wildfires

Poppe has pledged to prevent catastrophic wildfires, which drove the utility into bankruptcy in 2019 after its equipment sparked some of the worst blazes in California history. More than 100 people died and thousands of homes were destroyed.

The utility says it has reduced ignitions tied to its equipment by 68% since 2017 by installing more weather monitoring stations, hardening poles, covering and burying power lines and preemptively cutting power during dry and windy weather.

–With assistance from Josh Saul.

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Tesla Inc. failed to persuade an administrative judge to dismiss claims by a California regulator that the company overstated its vehicles’ self-driving capabilities — one of several ongoing regulatory investigations of the electric-car maker’s marketing.

The California Department of Motor Vehicles has alleged that Tesla disseminated false statements about its “Autopilot” and “Full Self-Driving” driver-assistance features, leading customers to believe they are more advanced than they are.

Monday’s ruling comes less than a month after a federal judge in San Francisco ruled that Tesla must face a proposed class-action lawsuit by consumers making similar claims.

While neither ruling addressed the merits of claims against Tesla, they represent a fresh setback for the carmaker just as Chief Executive Officer Elon Musk has staked the company’s future on autonomy.

Musk declared in April that Tesla is “going balls to the wall for autonomy” while committing the car maker to a next-generation, self-driving vehicle concept called the robotaxi. The billionaire entrepreneur has talked a big game about autonomy for over a decade, and has persuaded customers to pay thousands of dollars for its Full Self-Driving, or FSD, feature.

The name is a misnomer — FSD requires constant supervision and doesn’t render vehicles autonomous — but Musk has repeatedly predicted it’s on the verge of measuring up to the branding.

Meanwhile, the company faces federal probes into whether defects in Autopilot have contributed to fatal crashes, as well as investigations by federal prosecutors and the Securities and Exchange Commission into whether Tesla made misleading claims about the feature to the public.

Tesla’s lawyers also contended that marketing its vehicles as having full self-driving “capabilities” is not an assertion that the cars are currently fully autonomous, but rather a statement that they will be capable of driving themselves in the future after software updates.

Administrative Law Judge Juliet Cox sided with the DMV’s lawyer, Greg Call, who argued that the case shouldn’t be thrown out before the DMV has had a chance to introduce its evidence at a hearing later this year.

Tesla didn’t show that the California DMV “necessarily will be unable to present any relevant evidence,” Cox wrote in the order.

Tesla and the California Department of Motor Vehicles didn’t immediately respond to requests for comment.

–With assistance from Dana Hull.

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Ikea’s workers were quitting in droves in the US. In the UK and Ireland, half of all new hires were leaving before their first anniversary. Globally, each departure cost Ikea $5,000 or more to replace.

To stem the bleeding, the Swedish furniture behemoth needed to figure out what was making its store workers so unhappy — and fix it fast. By 2022, more than 62,000 employees were departing a year for various reasons, equating to about a third of its workforce, and the pandemic-era labor shortage made it difficult to replenish its ranks.

Workers “suddenly became very scarce,” said Jon Abrahamsson Ring, chief executive officer of Inter Ikea Group — the umbrella entity that oversees Ikea’s store franchising, product design and supply chain — in a recent interview in New York. Ikea focused on things that many businesses talk about doing but struggle to actually implement:  Boosting pay, increasing flexibility for frontline employees and using emerging technologies to make things easier on workers and their customers.

The results were stark: Voluntary turnover in the US dropped to about a quarter of employees by the end of 2023, from a third a year earlier. Globally, across the parent company’s more than 600 stores and warehouses, the quit rate fell to 17.5% in April from 22.4% in August 2022. While voluntary attrition has fallen in many white-collar occupations as hiring has slowed, employment in the retail sector has continued to trend up in recent months, making Ikea’s progress notable.

Retail jobs are often marked by low pay, erratic schedules and irate customers, which helps explain why the quit rate for retail workers is more than 70% higher than in other US industries, according to a 2022 report by McKinsey & Co. Half of them are considering leaving their job, McKinsey found, and of those, half want to ditch retail entirely. The situation isn’t better in other parts of the world: UK retailers typically need to replace one out of every two workers each year.

“Attracting, developing, and retaining frontline talent must become a top agenda item for retail CEOs,” the McKinsey report said, noting the challenge has only grown amid inflation and an environment where labor unions are increasingly flexing their muscles.

Privately held Ikea, whose 473 stores in 63 markets employ nearly 200,000 people, historically lost fewer workers than its industry peers, thanks in part to a Nordic corporate culture that’s known for being warmer and fuzzier than, say, US discount giants Dollar General Corp. or Walmart Inc. But managing a sprawling, global workforce in an era where work-life balance has become mandatory for many people isn’t easy, and signs emerged that it wasn’t all Swedish meatballs and bliss amid Ikea’s endless aisles of Billy bookcases and Stockholm rugs.

In 2018, a coalition of unions accused local Ikea managers of quashing organizing efforts at stores in the US, Ireland and Portugal. They filed a joint complaint with a branch of the Organization for Economic Cooperation and Development alleging that senior leadership “ignored red flags” about claims that workers’ rights were being trampled. “I never thought that Ikea would allow supervisors to intimidate and interrogate us,” Nancy Goetz, a worker in Ikea’s Stoughton, Mass., store, said at the time. “I expected more from Ikea.”

A wave of worker protests ensued. In Poland, employees were peeved that a wage hike was pegged below the rate of inflation. In South Korea, unionized workers said they received subpar treatment compared with their peers in other countries. In the US, the company had to apologize for serving fried chicken, collard greens and watermelon at a Juneteenth event for Atlanta employees. (One former Ikea worker went viral by posting videos as “Angry Retail Guy” that mocked clueless managers and shoppers alike.)

After several years of talks between the union coalition and Ikea, the company last year agreed in principle to let workers organize and allow store access to union representatives. Notably, though, the parties couldn’t come to terms on allowing labor reps to enter US stores.

“IKEA respects the rights of co-workers to join, form or not to join a union of their choice without fear of reprisal, interference, intimidation or harassment,” a spokesperson said. “The company is committed to maintaining an environment of mutual respect and ensuring all co-workers’ rights are protected irrespective of their preference and choice concerning unionization.”

While the talks dragged out, unhappy Ikea workers started looking elsewhere. Then, the pandemic hit, and labor shortages made finding and holding onto people even more challenging. “There was a shortage of staff for entry-level jobs,” said Ring.

The so-called Great Resignation impacted all industries, but few gave workers more reasons to flee than retail. Stores had to transform into online fulfillment centers overnight, while supply-chain bottlenecks and record inflation made everyday necessities scarce and more expensive, angering shoppers, who often took out their frustrations on employees. So-called “hero” bonuses soothed the pain, but didn’t last. Workers got disgruntled, and started leaving for other gigs.

‘Unhappy Workers’

It was a far cry from when 17-year-old Ingvar Kamprad founded Ikea, using his village’s milk van to deliver bargain-priced pens and picture frames. He began selling furniture made by local carpenters in 1948, and opened his first store in Sweden a decade later. Ikea created a frenzy when it entered the US in 1985, and helped turn Kamprad into the world’s eighth-richest person.

For a service-driven company like Ikea, unhappy workers can quickly lead to unhappy customers. “You cannot be a great place to shop if it’s not a great place to work,” said Philip Moscoso, a professor at Europe’s IESE business school who has studied the company.

When Ring took the CEO job at Ikea in September 2020, the retailer had an alarming retention problem. In the US, UK and Canada, employee turnover had crept well above 30% and swapping shifts was a cumbersome process. In India, staff quit when they became parents, due to meager child-related benefits.

Ingka Group, the Netherlands-based franchisee that operates and staffs Ikea stores in 31 countries that employ more than 165,000 people, embarked on a campaign to lower turnover, targeting the biggest pain points in each market. The approach improved pay and benefits, scheduling, new-hire orientation and in some places included an AI-powered tool that alerts managers when a worker might be in danger of quitting. Even employees’ uniforms were refashioned.

“Many times people come into world of retail thinking that this is a role I will take on until I find something better,” said Neena Potenza, who oversees HR in the US for Ingka. “But at Ikea, we want people to grow and develop.”

There’s still a ways to go, particularly when it comes to supporting employee mental health and workers with disabilities. In Japan, turnover has actually gone up amid a stubbornly tight labor market. In France, a push to convert temp workers to full-time status has also led to outsized employee departures. And in Puerto Rico, more than 50 Ikea warehouse employees just voted to unionize over complaints about pay and worker treatment.

For one US worker, the changes haven’t been enough. The sales associate, who asked not to be identified, quit recently after a dust-up with a colleague quickly escalated into disciplinary action, she said, with managers aligned against her. Rigid scheduling rules also forced her to miss critical medical appointments. In employee surveys, other workers have complained about poor communication and micromanaging.

Wage Bumps

A bigger problem in UK stores, though, was the tendency of new hires to quit within months of joining. The so-called onboarding process was poorly organized, with infrequent feedback from managers and newbies unclear where to turn to for advice. Ikea UK/Ireland strives to hold onto 85% of hires after three months, but that figure had dropped as low as 60%, according to Darren Taylor, people and culture manager for that region, who oversees 9,500 retail workers.

“Coming out of Covid, people re-evaluated what was important to them, and work-life balance became more important,” he said. “So it required a big change in terms of how we positioned ourselves to attract people into retail.”

Those people included Natasha Williams, 22, who got a job at Ikea selling kitchen fixtures last year. Ikea worked to smooth her transition: Getting from her home in Basingstoke to the Ikea store in Reading was a two-hour slog involving two buses and a train. So instead of six-hour shifts across four days, Taylor gave her three eight-hour shifts, and allowed her to start at 10am rather than 9am. “That changed everything — I was much happier at work,” Williams said.

Part-time staff, who make up about two-thirds of Ikea’s UK workforce, often don’t get enough hours to make ends meet, so Ikea is now giving some of them additional hours working remotely, answering customer calls. To retain students, Taylor has introduced shifts on weekends only, or just during school breaks.

“Small things,” said Taylor, “make a big difference.”

In India, the things that matter to Ikea’s workers are benefits like subsidized daycare, 26 weeks of parental leave for mothers and fathers and a five-day workweek (six days is the norm for many Indian retailers). Those perks are a game changer for Shweta Singh, a 39-year-old mom who was hired two years ago and runs the children’s furniture department in the Hyderabad store.

And in the US, where Ingka employs more than 17,000 people, one of the most impactful fixes was moving its shift scheduling tool online.

Previously, inflexible schedules didn’t allow for life’s daily hiccups— a sick kid, a flat tire. Unpredictable shifts can then have a ripple effect on workers’ well-being, leading to higher workforce turnover and economic hardship due to income fluctuations, according to studies by the Washington Center for Equitable Growth and the Brookings Institution.

“There is this notion that workers’ time is not valued,” said Kristen Harknett, a professor of sociology at the University of California, San Francisco, who has researched unstable work schedules.

In collaboration with a group called the Shift Project, Ikea US began testing the ability for workers in a few stores to swap shifts online, without a manager’s approval, replacing paper forms that had to be signed by both workers and their respective managers, which made swapping “particularly tedious,” Shift Project researchers found. Workers in the pilot program can also adjust their hours of availability more easily, and request to not be scheduled in certain blocks of time.

Also, a retention tool dubbed “Stay” analyzes historical data on departed workers and flags worrisome traits – such as constantly fluctuating hours – to managers. Store managers who have used the tool report turnover rates nearly three percentage points lower than those who don’t.

Now, more store workers like Natasha Williams are sticking around longer. She just got a raise after taking a two-week training class, and would eventually like to move from the kitchen department to interior design.

She’s not sure if she’ll work at Ikea her whole career, “but for the foreseeable future, definitely.”

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The cost of owning a home in the US has increased 26% since 2020 – and 32% in California – as expenses including taxes, insurance and utilities all soared during a period of high inflation across the economy.

The calculation is based on Redfin’s March median sales price of $436,291.

“It was really eye-opening to see just how much it costs to maintain a home,” said Jeff Ostrowski, an analyst at Bankrate. “Until you own a house, it doesn’t dawn on you how much money you’re throwing into the house every month and year.”

In its analysis, Bankrate factored in property taxes, home insurance, energy costs, internet and cable bills, and 2% of the sales price for maintenance — expenses many buyers tend to underestimate.

Home maintenance accounted for the largest share of ownership costs in Bankrate’s findings, so states where purchase prices rose dramatically through the pandemic saw bigger percentage jumps in overall outlays. Property levies were the second-largest piece of the equation in high-tax states such as New Jersey and Connecticut. In others, energy bills came in second.

The past four years of inflation dealt the biggest blow to homeowners in Utah, where expenses surged 44%. Idaho was next at 39%, followed by Hawaii at 38%. Alaska and Texas saw the smallest increases, with costs rising 14%. Annual tallies varied widely, from $11,559 in Kentucky to $29,015 in Hawaii, with a typical single-family home price of $993,000.

California costs were up 32% – the No. 8 largest gain – to $28,790 – the No. 2 expense.

Bankrate wrote: “The median single-family sale price in March was $848,300, which means maintenance costs of $16,966 a year. Homeowners in California also pay average annual property taxes of $6,832, average annual homeowners insurance of $1,572, average annual cable and internet costs of $1,434 and average annual energy bills of $1,986.”

Ostrowski said the totals in some cases may be overstated, especially for owners of newly built homes that don’t need repairs, but that they’re still helpful for buyers to keep in mind.

“It’s certainly better to be over-prepared and have some extra money sitting in a high-yield savings account,” he said, “as opposed to under-prepared and scrambling.”

Jonathan Lansner of the Southern California News Group added to this report.

Apple Inc. will introduce a new homegrown app next week called Passwords, aiming to make it easier for customers to log in to websites and software, according to people with knowledge of the matter.

The company is planning the new app as part of iOS 18, iPadOS 18 and macOS 15, the next major versions of its iPhone, iPad and Mac operating systems, said the people, who asked not to be identified because the initiative hasn’t been announced. The software, which can generate passwords and keep track of them, will be unveiled June 10 at Apple’s Worldwide Developers Conference.

The new app is powered by the iCloud Keychain, a long-existing Apple service that can sync passwords and account information between different devices. This capability was previously hidden inside the company’s settings app or presented when a user logs in to a website.

By turning the feature into a dedicated app, Apple is trying to get more people to use secure passwords and bolster the privacy of its devices. But the move also ramps up competition with third-party software. The new app will take on password managers like 1Password and LastPass, and Apple will allow users to import passwords from rival services.

A representative for Cupertino, California-based Apple declined to comment.

The software will also work on the Vision Pro headset and Windows computers. And it can support verification codes and serve as an authentication app similar to Google Authenticator.

The Passwords push is just one component of the WWDC event. The main focus will be Apple’s artificial intelligence initiative, which will add features like notification summaries, instant photo editing, AI-created emoji and a more powerful version of the Siri digital assistant. Apple will also announce a partnership with OpenAI to use the ChatGPT chatbot.

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Netflix Inc. faces a defamation lawsuit seeking at least $170 million from a woman who claims to be the inspiration behind a central character in the hit series Baby Reindeer.

Fiona Harvey sued the streaming service in a California court alleging the creators of the show exposed her identity and ruined her life “out of greed and lust for fame.” The program is said to be based on the real life of stand-up comedian Richard Gadd and his experience being stalked by a woman.

Netflix failed to verify lies told about her in the series, the lawyers said. There are “very serious misrepresentation of the facts” and details exposed in the series led social media users to identify her as the stalker, lawyers for Harvey said in the claim.

The portrayal of the character, named Martha, as a convicted stalker who sexually assaulted Gadd’s character, “viciously” destroyed her life, according to the claim.

Netflix used her “identity and likeness” for profits and resulted in “severe and extreme emotional distress,” Harvey’s lawyers said in the claim. They called for a trial by jury to recover more than $50 million in profit the show made for Netflix and over $120 million in damages.

Baby Reindeer has become a worldwide hit for Netflix — amassing 22 million viewers in just its third week on the site. Gadd’s spokesperson and Harvey’s lawyers didn’t immediately respond to requests for comment.

“We intend to defend this matter vigorously and to stand by Richard Gadd’s right to tell his story,” Netflix said.

–With assistance from Benoit Berthelot.

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Nvidia Corp. was already the world’s most valuable semiconductor firm. Now, it’s become the first computer-chip company ever to hit $3 trillion in market capitalization.

The shares of the Santa Clara, California-based firm have rallied roughly 147% this year, adding about $1.8 trillion as the insatiable demand for its chips used to power artificial intelligence tasks skyrockets. On Wednesday, shares rose 5.2% to close at a record $1,224.40, pushing the market value to more than $3 trillion and overtaking Apple Inc. in the process.

The last time Nvidia was worth more than Apple was in 2002, five years before the first iPhone was released. At the time, both companies were worth less than $10 billion each.

Nvidia has shown no signs of slowing down or letting its rivals catch up; the company’s Chief Executive Officer Jensen Huang said the firm plans to upgrade its so-called AI accelerators every year. Wednesday’s stock gain increased his wealth by more than $5 billion to $107.4 billion, according to the Bloomberg Billionaires Index.

“We see this sea change as in the very early innings,” said Angelo Zino, senior equity analyst at CFRA Research.

After the CEO’s keynote, Zino said he likes “the improved visibility” and sees “greater momentum on the GPU/CPU/networking side driving upside to consensus estimates.”

The company has been arguably the biggest beneficiary of a massive flood of AI spending, helping vault the company into a race to claim the title as the world’s most valuable company. The chipmaker still trails Microsoft Corp. by market value, but with shares on a tear Wall Street sees it as only a matter of time before Nvidia overtakes it.

Apple has struggled this year with the technology giant’s shares pressured by concerns over cooling iPhone demand in China and a fine from the European Union. Shares in the company have only recently turned positive for 2024 as investor sentiment toward the iPhone maker is slowly improving.

–With assistance from Bre Bradham.

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Consider it ironic, or at least a little poetic: Electric vehicles, great for combating climate change, don’t do well in extreme heat. It’s a paradox being thrown into relief as multiple US states bake under heat waves that are becoming more frequent and more intense.

High temperatures aren’t kryptonite for battery-powered vehicles. An EV in a hot climate has to work harder to keep its battery and its passengers cool, but the car will function just fine. On a chemical level, though, extreme heat is akin to heart disease for EV batteries, or a mellow and slow-moving form of cancer.

That’s because when temperatures climb, the ions in a car battery speed up. Once that happens, they often have trouble attaching to the anode or cathode. The pressure and speed can also create small cracks, which slow chemical reactions and make for less usable battery life.

To some degree, this happens with any fast-charging cycle. Using a Tesla Supercharger will move ions more quickly than plugging into a wall outlet, and the heat generated by rapid charging is one reason smartphone batteries aren’t speedier. But on extremely hot days, the ions in an EV battery whizz around even when the car isn’t driving or plugged in, and that can curtail range irreversibly.

“The worst case really is a car that sits in an unconditioned garage in Phoenix all summer without being plugged in,” says Scott Case, co-founder and chief executive officer of Recurrent, a startup that generates battery health reports for EV customers and dealers. “That will cook the battery really quickly.” If the car is plugged in, it can use charging power to keep its battery cool.

Cold weather also impacts EV batteries. The colder it is, the slower the chemical reactions and the less charge a battery holds. But those losses are short-term; come spring, a battery in snowy Michigan or chilly Maine will recover its full function, whereas heat can bring down maximum range in perpetuity.

“You can coach people, but you can’t say ‘Don’t live in Phoenix,’” Case says. “That one feels a little bit unfair.”

As EV adoption progresses in tandem with rising temperatures, drivers all over the world will have to get familiar with best practices for maintaining battery life. In the US in particular, some of the highest levels of EV adoption are in hot places. California, Florida, Texas, Arizona and Georgia are home to 56% of the nation’s battery-powered cars, according to the Department of Energy. Fortunately, nurture can neutralize much of nature’s heat handicap.

“Anywhere I can find shade in a hot Texas summer, I try to find it,” says Skyler Williams, an Austin-based entrepreneur who boned up on battery chemistry and maintenance before buying his Rivian R1S last August. “It doesn’t matter if I’m going to be in the grocery store for 10 minutes or two hours. Better safe than sorry.”

Williams also follows other good rules of thumb: He only charges at fast stations when he has to, always leaves his truck plugged in when it’s parked in the garage, seldom charges the battery past 80% and uses Rivian’s app to open the windows if he’s away from the truck on a hot day. After almost a year, his car hasn’t lost any range, which bodes well for resale value.

Battery health is fast becoming the next critical metric in the EV market, spurring a rush to quantify it on a granular level. Stephanie Valdez Streaty, director of strategic planning at Cox Automotive Inc., says four out of five EV shoppers now consider battery longevity when buying, which is one reason her team is cooking up a proprietary score to measure it.

“We’re still in heavy R&D mode on this, but that’s the vision,” she says. “Having an option to buy a used EV is so important and having transparency on battery health is going to be key.”

Recurrent, meanwhile, is a step ahead. Three times a day, the company scrapes battery metrics from more than 17,000 EVs signed up to its service. Using that data, Recurrent can quickly assign a score to any particular EV by looking at its estimated range, state of charge and odometer. If its system is able to capture a car while charging, even better.

An EV that has slogged through a handful of Texas summers, for example, may score lower than the same model with the same mileage in a temperate climate. Conversely, a Texas driver who took all the right precautions for her EV could see a higher Recurrent score than an equivalent car in a cooler climate that’s routinely driven to empty then recharged to full, practices that add wear and tear to a lithium-ion battery.

“Manufacturers are competing on three axes: overall range, charging speed and cost,” says Case. “They’ll be held accountable for a fourth axis and that’s ‘How long will these things last?’”

Regulators in California are already weighing a proposal that would require a measure of battery health on each EV for sale. To date, some of Recurrent’s best customers are dealerships in hot climates, where the difference can be stark between actual range and the official, “certified” range as outlined by the US Environmental Protection Agency.

“EPA range certifications are wrong on day one, because they don’t account for temperature variations,” Scott says. “This is a huge transition that everybody needs to see.”

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When a 23-year-old Sam Altman took the stage at Apple Inc.’s annual developer conference in 2008, he gushed about being able to use the company’s new App Store to promote his software, a friend-locating service called Loopt. “We think this is a new era of mobile, and we’re thrilled to be part of it,” Altman said.

Now, 16 years later, Apple is calling upon the entrepreneur again — but with a twist. This time, the company needs his help as much as he needs Apple.

Altman currently runs OpenAI, the leading startup in generative artificial intelligence. And Apple, racing to catch up in that area, has forged a partnership to integrate OpenAI’s ChatGPT into the iPhone’s operating system. Though the controversial Altman is unlikely to take the stage at the event, the agreement will be a key focus of Apple’s Worldwide Developers Conference next week — and it shows just how much the power in Silicon Valley has shifted over the past few years.

The deal gives OpenAI access to hundreds of millions of Apple users, including ones that might have been hesitant to try ChatGPT otherwise. For Apple, the arrangement brings the company the hottest technology of the AI era — a chatbot with eerily powerful abilities — that it can pair with its own services.

Apple has been developing a host of AI features, including ones that run on its devices and others that require cloud computing. It’s also infusing its Siri digital assistant with AI. But the company’s own chatbot isn’t yet up to snuff.

The OpenAI partnership is likely a “short- to medium-term relationship” for Apple, said Dag Kittlaus, a tech veteran who co-founded and ran the Siri business before it was acquired by Apple. “But you can bet that they will be working hard building out their own competencies here.”

The WWDC keynote address, delivered by Chief Executive Officer Tim Cook on June 10, is seen as Apple’s biggest sales pitch in years. The company has to convince consumers, developers and investors that it can thrive in the AI era. And there’s added pressure because Apple’s existing business is stagnant, with revenue declining in five of the past six quarters.

The two companies haven’t disclosed the deal publicly yet, and terms of the arrangement aren’t clear. Cupertino, California-based Apple declined to comment, as did San Francisco-based OpenAI.

Apple once had a head start in AI services. It released the Siri digital assistant in 2011, beating Amazon.com Inc.’s Alexa and the Google Assistant to the market. But it soon fell behind rivals, and that was before a seismic shift in 2022 when ChatGPT debuted.

The introduction of OpenAI’s chatbot in November of that year captured the imagination of consumers and sent tech giants scrambling to develop their own AI services. Apple’s biggest peers have all made headway since then. Google’s Gemini chatbot is vying with ChatGPT for supremacy in the nascent market. Microsoft Corp., OpenAI’s biggest backer, has begun weaving its AI-assisted Copilot into software. And Amazon.com Inc. has demonstrated an AI-enhanced version of Alexa.

In contrast, Apple kept its AI ambitions quiet until now. Cook said last year that the company would tread carefully in the new space and only add AI technology on a “very thoughtful basis.” More recently, he’s argued that Apple will have an edge in AI because of its “unique combination of seamless hardware, software and services integration.”

Behind the scenes, Apple employees have been working furiously to back up that promise. Around the time of the ChatGPT launch, small teams within the company’s AI and software engineering divisions began working on a competitor to ChatGPT, using a framework dubbed Ajax.

Software chief Craig Federighi pushed managers to pack the latest version of the iPhone and iPad operating system — known internally as “Crystal” — with as much AI as possible. Eddy Cue’s services division got to work on new data center infrastructure for powering online AI services. Staffers also began investigating how AI could come to Apple Music and the company’s office-productivity apps.

Apple found that its AI is capable enough to power features like voice memo transcriptions and photo editing, as well as new search capabilities in the Safari web browser and auto replies in apps like Messages. But it determined early on that OpenAI and Google were far ahead in chatbots and on-the-fly assistance.

That put Apple in a difficult spot. The company’s own technology wasn’t ready, and executives were concerned about reputational damage from a rogue chatbot. Some people within Apple even have a philosophical aversion to having a chatbot at all, people familiar with the situation have said.

But it was clear by then that consumers would expect Apple to offer such a service, and that set the company on the path to its deal with OpenAI. Several months ago, the company began meeting with the startup — along with Google and other chatbot providers — about integrating the technology into its iOS software.

By outsourcing the chatbot function, Apple can distance itself from the technology itself, including its occasional inaccuracies and hallucinations, the people said. But it also links Apple to a startup beset by upheaval and controversy. Altman, now 39, was briefly ousted last year for reasons that remain murky, and he recently drew the ire of movie star Scarlett Johansson for a soundalike AI voice.

Though Apple remains in talks with Google about using Gemini in its devices, the iPhone maker reached an agreement with OpenAI first. In the end, Apple may offer a number of third-party chatbots, but it’s negotiating the deals on a case-by-case basis, according to the people with knowledge of the situation.

OpenAI, meanwhile, will get the gigantic exposure that comes with being deeply integrated into some of the world’s best-selling smartphones and tablets. Still, Apple’s involvement may bring new scrutiny to the safety and privacy concerns swirling around ChatGPT. Depending on how deeply Apple plans to integrate the chatbot with its software, it also could mean that OpenAI has access to personal information, which could unnerve some users.

But Apple is expected to offer its new AI features as an opt-in service, according to the people familiar with the matter. So wary customers could easily steer clear of them if they’d prefer.

Regardless, the OpenAI agreement is likely a stopgap measure. Apple has a long history of eventually bringing outside technology in-house, such as when it replaced Intel Corp. chips with its own silicon.

Apple also is looking beyond chatbots. It aims to use large language models — a key technology behind generative AI — to help power a pair of robotic devices that it is secretly developing, the people said.

That includes a table-top robotic arm with a large, iPad-like display. The company also has been working on a mobile robot that can follow users around and handle chores on their behalf. And it’s looking to equip its AirPods with cameras and AI features.

More immediately, there’s the opportunity for Siri to finally live up to its potential, Kittlaus said. That could bring some vindication to a company that hatched the dream of a smart personal assistant under co-founder Steve Jobs.

“There are no longer any technical constraints to realizing the original Siri vision,” Kittlaus said.

–With assistance from Rachel Metz and Shirin Ghaffary.

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California regulators dealt the struggling solar industry a fresh blow, adopting rules that renewable advocates warn will discourage smaller projects.

The rules decided Thursday come more than a year after the state most responsible for making solar power mainstream slashed incentives for residential systems, prompting rooftop installations to plunge.

The California Public Utilities Commission rejected that plan in favor of another backed by the state’s electric utilities that is designed to avoid shifting costs onto Californians who don’t participate in community solar projects.

“We need to be very focused on this downward pressure on bills at this moment because we’re in the midst of an affordability crisis in electricity bills,” said Alice Reynolds, California Public Utilities Commission president. “Keeping the bills affordable is also key to unlocking our climate change objectives.”

Solar advocates say under the new rules compensation for developers will be too low to encourage investing in such projects. When an earlier draft of the rules was released in March, Neil Chatterjee, a Republican former chairman of the Federal Energy Regulatory Commission, sent the CPUC a letter saying the move could “unsettle markets across the country.”

“You can’t deploy the amount of community solar that the federal government wants without California,” Steve Campbell, western regulatory director for advocacy group Vote Solar, said in an interview. “Nationally speaking, California is critical.”

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