Apple In Talks to Use Google AI

After Microsoft’s partnership with OpenAI—this would be a massive shift in the AI race

BREAKING NEWS

Alphabet stock is surging on new reports coming out of Bloomberg that Alphabet is set to tap Google Gemini as their main model for AI services on the iPhone. This has enormous, sprawling implications. 

WHAT HAPPENED

Apple has publicly lagged behind the rest of Big Tech in the AI race—with no tangible announcements teasing AI of their own. Now, Bloomberg is reporting that Apple is in advanced talks to bring AI services to iOS this year—but doing so by initially licensing Google Gemini instead of building their own models. Specifics surrounding the partnership haven’t been discussed and probably won’t be announced before Apple’s main developer conference in June. 

NATURAL PROGRESSION

A partnership here makes sense considering Apple and Google’s longstanding agreement to have Google search be the primary search engine on Safari and the rest of the Apple ecosystem. After Gemini publically lagged behind the likes of Anthropic and ChatGPT—even rumors of an agreement like this are a huge confidence boost for Alphabet’s AI efforts. Since Google AI is powering all of the new LLM-powered features inside Samsung’s flagship devices, an Apple license would make them a smartphone AI juggernaut. 

WHY IT MATTERS

While this is a huge boon to Alphabet in the short-to-medium term and provides some lift to Apple in early trading—a lot of analysts see this as a very worrying sign. Most tech-watchers on the Street have assumed Apple has been developing at least basic capabilities in the LLM space given that AI models already power so much inside the Apple tech—like iPhone battery management and some of the spatial recognition within the Vision Pro headset. With device revenue languishing, investors have been hopeful that 2024 would bring a wave of AI announcements to Apple stock. Instead—Apple may indeed be bringing AI features to iOS, but without their own models to back it up. This is making some investors question exactly what Apple has been doing for the past few years as device updates have been lackluster and long-term projects like the Apple EV have been shuttered. While there’s more long-term worry here—Apple stock still rose 1% while Alphabet jumped nearly 4% in early trading.