People definitely will care that such private data stays safely on the phone. But it’s kind of a moot point since there is no way to share that kind of data with ChatGPT anyway.
I think Apple is not trying to compete with the big central “answer machine” LLMs like Google or ChatGPT. Apple is aiming at something more personal. Their AI goal may not be to know everything, but rather to know you better than any other piece of tech in the world.
And monetization is easy: just keep selling devices that are more capable than the last one.