What the Apple and Google Gemini deal means for both companies

For many years, Apple and Google had it They will, they won’t, they will The kind of relationship, insofar as the AI ​​company will choose Apple to support its virtual assistant Siri and give it new personalization and AI-powered agent capabilities. Apple has spent the last year or two competing, It is said Consider working with OpenAI or Anthropic to support the new Siri. But in a multi-year partnership announcement it is worth a Bachelor’s degreeIn the end, Apple announced that it would live happily ever after with Google — and that the company’s Gemini AI models would support it More personalized Apple Siri version, coming sometime in 2026.

“After careful evaluation, Apple has determined that Google’s Al technology provides the most capable foundation for Apple Foundation models, and is excited about the innovative new experiences it will unlock for Apple users,” Google and Apple wrote in a memo: Joint statement.

The deal allows Apple to use both Gemini AI and Google’s cloud technology to power its future models and Apple Intelligence features, the companies said, adding that Apple Intelligence “will continue to run on Apple devices and private cloud computing, while maintaining Apple’s industry-leading privacy standards.”

The latter point was highlighted by analysts at Morningstar, who wrote in a note on Monday that the agreement will help Apple’s reputation for security and privacy “remain intact, as it will use Gemini instances on its own servers in its own data centers across its private cloud computing offering for AI processing.” The analysts added that they “expect users to be able to sign up for engagement claims with Gemini directly as well.”

But what does this deal actually mean for both companies? It is not yet clear exactly how the technology exchange will work. Will Google provide its own AI models for Apple to white-label and build upon through Apple’s own AI team, or will Google work alongside Apple to ensure a successful final product in the new Siri? We’ll see. But the fact that the company’s joint statement emphasized “private cloud computing” for all of that means at the very least that Apple’s new deal with Google will be similar from a privacy standpoint to its deal with OpenAI in Siri. Apple will likely ask a user for their permission before sharing anything directly with Google, said William Kerwin, senior equity analyst at Morningstar. Edge.

On the surface, Apple and Google may seem like rival tech giants, but the two companies have had a close and complex relationship for more than a decade. In particular, the two are linked to a long-standing, mysterious deal that involves Apple products featuring Google as the default search engine on their devices, which was at one time responsible for… Nearly half From Google search traffic. Bruce Sewell, Apple’s former general counsel, described the idea of ​​”co-competition” to… New York Times, Saying“You have fierce competition, but at the same time, you have necessary cooperation.”

Google paid Apple Up to $20 billion annually To maintain its position as the default search engine on Apple devices, through Apple’s Safari browser. After a lengthy antitrust lawsuit, a federal district court judge to rule Last fall, Google was able to continue making those payments. This remedial ruling has paved the way for Monday’s announcement – and the ‘cross-competition’ involved means both companies stand to benefit significantly, although… Rumor The billion-dollar-a-year payment from Apple to Google is in many respects negligible in such a high-value industry.

The relatively low annual payout helps illustrate how mutually beneficial the partnership is: a win-win for two FAANG companies that help each other strengthen the fences against high-flying AI startups that could upset their long-standing advantages.

“From Apple’s perspective, this is definitely a win if you think about the pain they’ve had with their AI strategy to this point,” Morningstar’s Kerwin said. “The bottom line is that they overpromised in the summer of 2024, and have not achieved what they promised so far.” He added that the multi-year agreement means that Apple can stop investing in building a reputation as a leading model company and instead focus on the user experience with a different company’s AI foundation, and also eventually, potentially, become a major player in the battle of AI agent providers for consumer attention — which requires AI agents that are, in theory, so useful that they break into the consumer market in a new and unprecedented way.

On Google’s part, Kerwin said: “The win is similar to what they get with their search, where they become, in the mind of the consumer, an actual choice as an AI model… This will give them a larger number of users from the iPhone user base and will also enhance the brand image as an AI model that supports all of these features.”

However, experts say the deal could end up drawing the same scrutiny that Google just finished dealing with.

“I think it would have been possible through the Google antitrust trial that Google could have been prevented previously from making deals like this — (it’s) certainly a potential remedy that could have been on the table and not adopted by the judge,” said James Grimmelman, a professor of digital and information law at Cornell Tech and Cornell Law School. Edge. Part of the government’s case in the search trial was specifically aimed at preventing Google from making similar deals in the AI ​​space, though Google has largely gotten its way on that front.

“That doesn’t mean this deal won’t raise antitrust concerns, and it’s possible that a few years from now Google could face a new antitrust trial for being an AI provider to Apple in the same way it was facing antitrust scrutiny for being a search provider,” Grimmelman said. “If you think back to when Google was starting to emerge as the default search provider and these placement deals were starting, that was a less concentrated search market. So it’s possible that the market could evolve in a way that would make a deal like this more problematic over time.”

Blake Reed, an associate professor of law at the University of Colorado School of Law, said the details of the arrangement between Apple and Google are not yet entirely clear, and those details are important from an antitrust standpoint and from an AI business standpoint.

“The primary concern about the Apple-Google search deal was that Apple sending this huge volume of queries to Google would provide Google with a moat by making it difficult for anyone else to build a competitive search engine,” Reid said. “But will Apple send data in a similar way here? Apple’s initial statement indicates that it will use Google’s technology as a set of white-labeled technology that it will customize and deploy as a service for Apple. If Google is only getting money from Apple, that makes the antitrust problem less clear.”

The announcement also comes after the highly publicized trials and tribulations of Apple as it attempted to upgrade Siri’s AI capabilities to provide more personalization and agented task completion. At the company’s Worldwide Developers Conference last June, Siri was mentioned conspicuously absentapart from announcing that previously promised updates were behind schedule.

“We’re continuing our work to deliver features that make Siri more personal,” Craig Federighi, Apple’s senior vice president of software engineering, said during the June event. “This work has taken more time to reach our high quality level, and we look forward to sharing more about it next year.”

Clearly that time is now. It’s been an almost embarrassing year for Apple’s AI strategy: Apple Intelligence summaries of the messages sent Significantly off the markTV ads for new Siri features introduced last year (although those features haven’t arrived yet), and It is said Longtime AI chief John Giannandrea is replaced by Mike Rockwell, who previously led Apple Vision Pro. So the company is shaking things up with a new, high-profile partnership with Google and a group of… Upcoming AI integrations With other startups.

“Apple is concerned that the rise of AI threatens to circumvent it completely — that it has a unique relationship with users because of its hardware and its integration of hardware and software, and that AI threatens to circumvent that relationship in the same way that the rise of the web browser has severely threatened Microsoft’s relationship with its users,” Cornell’s Grimmelman said. “Apple is choosing to first try to develop its own AI models and then partner with Google here — this is its attempt to stay in that relationship and stay relevant.”