Apple Might Team Up With Google to Put AI on iPhones

The digital devil you know.

Apple is in discussions with Google about integrating Google’s generative AI software Gemini into its hardware offerings, sources told Bloomberg. That might initially seem counterintuitive: Google is Apple’s only competitor when it comes to operating systems on phones. However, it wouldn’t be their first deal — in fact, the way Apple has previously baked Google products into its iPhones has been the subject of intense antitrust scrutiny.

Strange Bedfellows

Apple has been characteristically tight-lipped about how it plans to hop on the generative AI hype train. But it feels like the company was caught off guard as the AI boom started to blossom. Apple’s secrecy around its generative AI strategy managed to cheese off both investors worried about its safety, and investors jonesing for the company to keep pace with other Big Tech companies.

Apple CEO Tim Cook said last month that generative AI features would come to its devices sometime this year, and Bloomberg’s reporting suggests it’s looking to outsource the endeavor rather than build the software in-house. Sources told Bloomberg that Apple had also held talks with OpenAI, the company behind ChatGPT. If Apple does end up striking a deal with Google, however, that could be a red flag to antitrust regulators:

• During the Department of Justice’s antitrust lawsuit against Google last year, a key area of focus was a deal that Google had struck in 2003 with Apple which set Google’s search engine as the default search engine on Apple’s Safari browser. It emerged during the trial that Google pays Apple as much as $26 billion per year to keep that deal in place.
• This deal, prosecutors argued, helped cement Google’s considerable dominance in the search engine market. The trial wrapped up in November and the judge set closing arguments for May this year, so we have a couple of months before we find out how well the DOJ made its case.

A new generative AI deal would presumably cut in the other direction, with Apple licensing out Google’s tech, but bear in mind that Microsoft recently paid news organization Semafor to integrate ChatGPT into its output. 

Regulatory Gravitational Pull: Apple is in the process of beating a fairly tactical regulatory retreat in the EU. Last week, the iPhone maker announced it would scrap a long-standing policy that prevented people from using its devices to download apps off the web, meaning they had to use its bespoke App Store. That came just a week after the EU slapped Apple with a $2 billion fine over how the company dictates terms to music streaming apps. You just gotta keep walkin’ it off, Apple.