Alphabet Remains Silent on Google-Apple AI Deal, Even for Investors
During a recent earnings call, Alphabet faced questions regarding its AI partnership with Apple, specifically about Google’s ongoing initiatives. However, these inquiries went unanswered, signaling potential hesitance from Alphabet about discussing the implications of this collaboration. Analysts were particularly interested in understanding how the Google-Apple AI deal might affect Alphabet’s core AI business.
Google-Apple Partnership: A Brief Overview
The relationship between Google and Apple has proven beneficial for both parties over the years. Recent documents from the Department of Justice revealed that Google has paid Apple $20 billion to remain the default search engine on Apple devices. This arrangement has granted Google access to Apple’s expansive customer base, which recently reached 2.5 billion active devices globally.
The AI Deal and Its Financial Implications
- The ongoing AI deal is speculated to cost Apple around $1 billion annually.
- However, the direct benefits of this partnership for Google are less clear compared to its search agreements.
In traditional Google Search, advertisers pay for visibility at the top of search results. In contrast, the integration of ads into Google’s AI Mode, which is still in the experimental stage, presents a complex challenge. After an announcement last May to introduce ads in AI Mode, Google has been testing ways to integrate ads with chatbot responses.
Future Directions in AI and Advertising
Google is also exploring new avenues, such as agentic shopping through its AI Mode, guiding users toward a smoother checkout experience directly from the AI interface. Meanwhile, competitors like Anthropic are introducing alternative business models, as demonstrated by their plans for a Super Bowl advertisement that critiques the ad-supported AI frameworks of Google and OpenAI.
As of now, the specifics surrounding the Google-Apple AI deal remain largely unexplored in public forums. During the earnings call, Alphabet’s CEO, Sundar Pichai, expressed pride in serving as Apple’s “preferred cloud provider,” indicating collaboration on developing future Apple foundation models based on Gemini technology. This sentiment was echoed by Google’s Chief Business Officer, Philipp Schindler, reinforcing the strategic relationship between the two tech giants.
The long-term ramifications of their collaboration, especially regarding AI, are still uncertain. Currently, key details surrounding this partnership remain under wraps, illustrating Alphabet’s cautious approach to discussing its AI strategies with stakeholders.
