March 18 (Reuters) โ In a significant development, Apple (AAPL.O) is currently in negotiations to integrate Googleโs advanced Gemini artificial intelligence platform into its iPhone offerings, according to sources reported by Bloomberg News on Monday.
The discussions revolve around the licensing of Gemini to enhance certain upcoming features of the iPhoneโs software later this year, though specifics on the agreementโs terms, branding, or the exact implementation have yet to be solidified.
Market Reaction and Strategic Timing
Following the news, Alphabetโs shares saw a substantial increase of over 6% in early trading in the United States, with Appleโs stock also rising by 2.5%. Any formal announcement of a deal is anticipated to be postponed until June, coinciding with Appleโs yearly developer conference.
Apple has been in conversations with OpenAI, the creators of ChatGPT, about incorporating its model, highlighting Appleโs keen interest in bolstering its AI capabilities.
Potential Impact of the Deal
Immediate comments from Apple, Google (owned by Alphabet, GOOGL.O), and OpenAI were not available in response to Reutersโ inquiries. A collaboration between these tech giants could significantly extend Googleโs AI services across Appleโs vast ecosystem, which boasts over 2 billion active devices.
This move is seen as a strategic effort by Google to strengthen its position against Microsoft-backed OpenAI, while simultaneously addressing Appleโs challenges in rapidly deploying AI applicationsโa factor contributing to Appleโs recent 10% share price decline and its loss of the title as the worldโs most valuable company.
Regulatory Considerations and Future Plans
However, this deal might attract increased attention from U.S. regulators, given Googleโs previous legal challenges regarding its search engine dominance and the financial arrangements with Apple to maintain its position.
Daniel Ives, an analyst at Wedbush, highlighted the significance of this partnership, stating, โThis strategic partnership is a critical element in Appleโs AI strategy, uniting with Google to leverage Gemini for powering AI features Apple plans to introduce.โ He further emphasized the advantage for Google, noting the access to Appleโs substantial user base and the considerable licensing fees involved.
Googleโs January collaboration with Samsung, Appleโs competitor, to implement its Gemini AI in the Galaxy S24 smartphone series was part of its broader strategy to enhance Geminiโs adoption following initial setbacks. Apple CEO Tim Cook recently indicated the companyโs substantial investment in generative AI, with plans to unveil its applications later in the year.
According to Bloomberg, while Apple aims to deploy its in-house AI models for certain new functionalities in the forthcoming iOS 18, it is also exploring partnerships to drive generative AI features, including image creation and essay writing based on simple inputs.
