Fast Facts
- Apple could partner with Google or OpenAI, among other companies, to boost its generative AI efforts.
- This new report comes after CEO Tim Cook teased a significant investment in AI.
Make no mistake about it: Apple (AAPL) is prepping its entry into the artificial-intelligence and generative-AI space, with a likely broad feature set to spread across its various operating systems.
But Cupertino might be taking a unique approach to the rollout.
While we’ve heard rumors and reports that Apple has been working on its own large language model, codenamed Ajax, the most formal comment we’ve heard is from CEO Tim Cook on a Feb. 2023 earnings call. Cook noted the “incredible breakthrough potential for generative AI, which is why we're currently investing significantly in this area.”
Related: Report: Apple's latest acquisition shows an AI push isn't far off
According to a new report from Bloomberg’s Mark Gurman, Apple is in talks with Google (GOOG) to integrate Gemini into the iPhone and the broader OS ecosystem. This would be a massive agreement between two of the world's largest tech companies and would likely catch the eyes of consumers — and regulators.
The companies are negotiating to enable Gemini to be used on the iPhone, effectively letting Apple license the AI model. This would be the second partnership between the two, as Google is currently the default search engine on the iPhone, iPad and Mac, something that came under scrutiny during last year's antitrust trial against Google.
How Apple would rebrand Google's AI within its software remains to be seen.
Considering that Apple has been building its own feature set and functionality for AI that lives on devices rather than going to the cloud, the report notes that Gemini could be Apple’s choice of a partner model for the generative AI component.
This would let iOS and the iPhone match Android on Pixel and Galaxy smartphones, which currently offer advanced photo editing and even text generation.
Samsung and Google have followed a similar path, as Gemini powers much of the AI features on the Galaxy S24 family, including “Circle to Search.” You can see our testing with that here, but it would be a boon for a similar feature on the iPhone.
However, Google and its Gemini model might not be the only company Apple has been talking with about a license. The report also notes that Apple has spoken with OpenAI, the Sam-Altman-helmed company behind ChatGPT.
Apple will likely show off the new AI features and the broad-ranging updates for Siri, other apps and other services at its annual World Wide Developers Conference, which is generally held in June.
We’ll likely see a mix of AI tech and features built by Apple and integration with a partner service, be it Gemini, OpenAI or a completely different partner.
This report also comes just a few days after Apple reportedly acquired DarwinAI, a Canada-based startup focusing on making AI processes faster and more efficient.
TheStreet has reached out to Apple, Google and Open AI for comment on the reported talks.
Related: Apple CEO Tim Cook sends clear message about AI to Wall Street
Wall Street reacts to AAPL-GOOG: Stocks higher
Shares of both companies pushed higher Monday morning following the report; at last check Apple's stock was up 2.6% and Google's stock was up 6.7%.
Wedbush analyst Dan Ives called the news the "missing piece" in Apple's AI strategy. He added in a note that such a partnership would be a "major win for Google to get on the Apple ecosystem and have access to the golden installed base of Cupertino with a major license fee attached to this."
Ives said the partnership would give Apple the technological foundation to get back in the AI game in an "aggressive strategy we loudly applaud."
Ives expects to hear more details on the deal at the Apple developers conference in June.
Wedbush's Scott Devitt said in a note that the potential deal would serve as a big "validation moment" for Google's work in generative AI.
Deepwater's Gene Munster called the potential deal a "big win" for both companies.
"It’s a big win for Google because Apple would likely pay Google a lot per year and Gemini would gain distribution on about 1.4 billion active devices," he said.
"It’s a win for Apple because they have a unique opportunity to lead in personalized AI, and leveraging Gemini would accelerate that timeline. In the race to win in AI, first-mover advantage is everything."
Munster said he expected a licensing deal to carry a price tag "in the billions per year," potentially adding 1% to 2% to Google's overall revenue, which is expected to hit $340 billion this year.
Munster has previously told TheStreet that the key to Apple's potential success in AI revolves around its massive installed base and Siri, something that could enable the usability and convenience of Apple's future AI products to push it above the bulk of the competition.
This latest Big Tech push into AI comes as ethical concerns regarding misinformation, sustainability and economic inequity, among many other things, have yet to be addressed and regulation has yet to broadly and substantially appear.
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