According to Bloomberg News on Monday, which cited sources familiar with the matter, Apple is in discussions. These discussions involve integrating Google’s Gemini artificial intelligence engine inside the iPhone.
The source stated that the talks are about licensing Gemini for some new capabilities that will be added to the iPhone software this year. However, it did not specify the conditions, branding, or implementation strategy of an AI agreement.
Early U.S. trade saw a 6% increase in Alphabet shares while Apple saw a 2.5% increase.
An agreement is unlikely to be publicized before June, when Apple is scheduled to host its annual developer conference. Additionally, the source states that the iPhone manufacturer recently had discussions regarding the use of its model with ChatGPT vendor OpenAI.
Requests for comment from Reuters were not immediately answered by Apple, OpenAI and Google, which is controlled by Alphabet.
In a bid to surpass Microsoft-backed OpenAI, Google is poised to expand its AI services to over 2 billion active Apple devices. This potential agreement between the two companies could facilitate this integration.
Additionally, it might help calm investor concerns about Apple’s sluggish AI app roll-out. This year, a 10% drop in the company’s share price has caused Apple to lose its position as the most valuable company in the world. Consequently, its reign at the top has come to an end.
With a genAI relationship, the Alphabet subsidiary may be able to allay concerns that services like ChatGPT will undermine its dominant position in search. For years, the companies have been in partnership. Consequently, Google is the default search engine for Apple’s Safari web browser.
However, the deal might also attract closer examination from US authorities. They have already filed a lawsuit against Google, alleging that it illegally suppressed competition by providing Apple with billions of dollars to maintain its search monopoly.
“This strategic partnership is a missing piece in the Apple AI strategy and combines forces with Google for Gemini to power some of the AI features Apple is bringing to market,” said Daniel Ives, a Wedbush analyst.
He was alluding to Apple’s California headquarters when he remarked, “This is a major win for Google to get onto the Apple ecosystem and have access to the golden installed base of Cupertino with clearly a major license fee attached to this.”
In January, Google teamed up with Samsung, Apple’s rival, to implement its genAI technology in the South Korean company’s Galaxy S24 series of smartphones. This partnership aims to boost the usage of Gemini following some setbacks during its roll-out.
Last month, Tim Cook, the CEO of Apple, announced that the company was “significantly” investing in generative AI. He added that further details about the technology’s applications would be disclosed later this year.
According to the Bloomberg article, Apple is seeking a partner to enhance genAI features. These features include creating images and writing essays in response to basic prompts. However, Apple intends to utilize its in-house AI models for certain new capabilities in its upcoming iOS 18.
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