Overview:
- Alphabet's shares surged by over 4% on Monday following a Bloomberg report stating that Alphabet and Apple were engaged in active talks for Gemini to support certain features expected to debut on the iPhone later this year.
- On the other hand, Apple's shares saw a more modest increase, closing up by less than 1%.
Apple Considers Partnership with Google for AI Integration in iPhones
The upcoming batch of Apple iPhones may receive a significant artificial intelligence upgrade thanks to a potential partnership with tech giant Google.
Bloomberg's report on Monday revealed that Apple is exploring the possibility of integrating Google's Gemini AI engine into its iPhones. However, neither Apple nor Google has confirmed the details of this potential deal, and both companies have remained silent in response to inquiries.
LISTEN NOW: Apple is now reportedly in talks with Alphabet to put Google’s Gemini AI model into iPhones. We discuss. Listen and follow the @CNBCTechCheck podcast here: https://t.co/GkIlXbLjJr pic.twitter.com/MlFy0iSkLQ
— CNBC (@CNBC) March 18, 2024
Source: Twitter/CNBE
Potential Benefits for Apple and Google
Financial analysts on Wall Street foresee advantages for both Apple and Google if the partnership materializes. Melius Research analysts highlighted the possibility of Apple receiving compensation from Google for this integration, especially if it contributes to Google's search revenue.
For Google, such a collaboration would boost its reputation, particularly when compared to competitors like Microsoft and OpenAI, following challenges in launching reliable AI products.
Uncertainties Surrounding the Deal
Despite ongoing discussions between Apple and Google, the finalization of an agreement is not guaranteed. Bloomberg noted that Apple has also engaged in similar talks with Microsoft's OpenAI, indicating the complexity of negotiations in this space.
Competition in the Generative AI Market
Google and Microsoft are currently engaged in fierce competition to dominate the generative AI market, a technology that gained significant attention in 2023 with the introduction of OpenAI's ChatGPT. This technology has transformed various aspects of work and entertainment, raising concerns among policymakers and tech companies about its societal impact.
Potential Implications for Apple’s iOS 18
Analysts speculate that Apple's discussions with Google aim to enhance its upcoming iOS 18, set to be announced at its product event in June. If the partnership is finalized, Apple would gain access to Google's Gemini AI app, potentially improving features like Siri, facilitating AI development in the App Store, and enhancing edge processing for faster and more secure user experiences on Apple devices.
Challenges Faced by Google’s Gemini AI
However, Google's Gemini encountered challenges following its rebranding last month. In February, the search giant suspended its Gemini artificial intelligence chatbot from generating images due to inaccuracies in historical depictions. This setback prompted apologies from the company and raised questions about the reliability of its AI products.
Insights from Analysts
According to Dan Ives, a senior equity research analyst at Wedbush Securities, the potential partnership between Apple and Google is driven by Apple's ambition to boost iPhone sales. Ives believes that this collaboration could provide Apple with the foundation to revolutionize the smartphone market with advanced AI capabilities in the iPhone 16, currently under development at Apple Park.
As negotiations between Apple and Google continue, the tech industry eagerly awaits further developments that could shape the future of AI integration in smartphones.
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