Apple turns to Google to power AI upgrade for Siri.

In a significant strategic shift, Apple is leveraging Google’s advanced artificial intelligence capabilities, specifically its powerful Gemini AI models, to enhance a range of its services, most notably a more personalized and intelligent iteration of its virtual assistant, Siri. This multi-year collaboration marks a notable departure from Apple’s historically insular approach to technology development, signaling a pragmatic response to the accelerating pace of AI innovation across the industry. The partnership, announced via a joint statement from both tech behemoths, promises to unlock "innovative new experiences" for Apple users, aiming to bridge the perceived gap in AI prowess that has emerged as competitors like Google and Samsung have aggressively integrated sophisticated AI features into their devices.

Industry analysts interpret this move as a candid admission by Apple that its internal AI development, while substantial, has not yet reached the competitive scale and capability of Google’s leading-edge Gemini models, at least in the short term. Francisco Jeronimo, a prominent analyst at IDC, articulated this perspective, stating, "By outsourcing the foundational layer of its AI to Google, Apple is effectively admitting that its internal efforts couldn’t compete with Google’s Gemini in terms of capability and scale in the short term." He further elaborated that while this represents a "significant and pragmatic strategy" for Apple, it also signals a deviation from its long-standing tradition of complete vertical integration. Historically, Apple’s success was partly attributed to its meticulous control over every aspect of its technology stack, a strategy that provided a distinct competitive advantage.

Despite this shift in development philosophy, analysts anticipate that the deal will be positively received by consumers. There is a discernible and growing demand among iPhone users for advanced AI functionalities, a demand that is being met by rival smartphone manufacturers. Paolo Pescatore, a tech analyst, noted that Apple’s recent financial performance suggested AI was not the primary driver for purchasing decisions. However, he predicts, "this will gradually change as AI-powered services gain adoption." This sentiment underscores the evolving expectations of the modern smartphone user.

This collaboration with Google is not Apple’s first foray into partnering with external AI leaders. In a similar vein, in June 2024, Apple announced a partnership with OpenAI, integrating the popular ChatGPT chatbot into its suite of generative AI tools, branded as "Apple Intelligence." This earlier integration allowed users to access advanced conversational AI directly within the Apple ecosystem. In their joint statement on Monday, Apple and Google emphasized that Apple Intelligence will continue to operate within Apple’s robust Private Cloud Compute system, a framework designed to maintain user privacy. The statement read, "After careful evaluation, Apple 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." Crucially, they reiterated that "Apple Intelligence will continue to run on Apple devices and Private Cloud Compute, while maintaining Apple’s industry-leading privacy standards." This dual approach aims to balance cutting-edge AI capabilities with Apple’s stringent privacy commitments.

Details surrounding the financial specifics of the Google-Apple deal remain undisclosed beyond the initial joint announcement. However, given the history of substantial agreements between the two companies for integrating Google software into Apple devices, which have previously been valued in the billions of dollars, this collaboration is likely to be substantial. Jeronimo cautioned that while iPhone users familiar with Google’s products might not find its AI powering certain Apple features particularly alarming, it could raise concerns among regulatory bodies.

This potential regulatory scrutiny is not without precedent. Prior to a US judge’s ruling in August 2024 that found Google had operated an illegal online search monopoly, it was revealed that the tech giant had paid over $26 billion in 2021 alone to various companies, including Apple, to secure its search engine as the default option on iPhones. This precedent highlights the significant financial leverage Google wields in its relationships with device manufacturers.

The European Union and the UK have previously expressed concerns and initiated investigations into major tech deals, driven by fears that dominant companies could exploit their size, wealth, and market power to maintain monopolies in specific sectors. The UK’s Competition and Markets Authority (CMA) has been particularly active, designating Apple and Google in October as holding "an effective duopoly" within the UK market. This designation grants the CMA the authority to demand changes from firms deemed to possess excessive market power. The CMA has labeled both companies as having "strategic market status," a move that allows for direct intervention. The BBC has reached out to the CMA for comment regarding the latest development in this significant tech alliance. The implications of this partnership for market competition, user experience, and regulatory oversight are far-reaching and will undoubtedly be closely monitored in the coming months and years.