Apple and Google Are So Back

There was a time not too long ago, when Apple and Google were two peas in a pod. Steve Jobs was regularly advising Google founders Larry Page and Sergey Brin and then-Google CEO Eric Schmidt was on Apple’s board. When the iPhone launched in 2007, it featured core apps powered by both Google Maps and YouTube. Oh yes, and Google Search was a key pillar of Safari. Probably the key pillar. Such a key pillar that while those other partnerships withered, it remains intact today.

And that’s especially wild because it survived the complete and utter deterioration of the relationship between the two companies. When Google launch their Android project to the world, and the devices went from looking like BlackBerry copies to iPhone clones, Steve Jobs famously had enough. Not only was Schmidt gone from the board, it was thermonuclear war. That may sound like hyperbole. But it's not. It's a quote:

"I will spend my last dying breath if I need to, and I will spend every penny of Apple's $40B in the bank, to right this wrong. I'm going to destroy Android, because it's a stolen product. I'm willing to go thermonuclear war on this."

I would say that's a pretty strong stance. Jobs felt Google had stabbed Apple in the back. Sadly, Jobs did pass away, tragically far too young, still holding this grudge.

As the iPhone/Android wars of the 2010s eventually settled down as the market settled for smartphones. There were iPhone people and there were Android people. Sure, they bickered about green and blue bubbles, but it morphed into more of a Cold War. By the time the Age of AI rose, that war took a backseat to the hot ones. Google was busy fighting those wars while they fought for their lives as everyone started gunning for the kingdom: Search.

Related, and as mentioned, the Google/Apple Search partnership remained intact throughout all of this. And grew to the point where it’s now well past $20B a year that Google pays to their old friend turned enemy.

This was, of course, a focal point of Google’s recent antitrust case. And while there was a real fear on both sides — but certainly on the side of Apple — that this deal would be killed by the court, somehow, it endured.

And now it dovetails perfectly into the news this week from Mark Gurman at Bloomberg that Google is looking like the most likely winner of Apple’s AI business.

While the company first partnered with OpenAI to augment Siri, over the past year it has become clear that Siri itself was the problem. To be clear, that was clear to everyone outside of Cupertino long before that, but they got the message this year. Heads rolled. Teams shuffled. And Apple looked themselves in the mirror and realized they could not do this themselves. And so a great AI bake off ensued.

While OpenAI seemed like the obvious front-runner given the existing relationship, early reports from Gurman indicated that the Apple team actually favored Anthropic’s models. But there was a problem. Perhaps 1.5 billion of them. As in, the amount of money Anthropic was apparently asking for in order for Apple to use Claude. Given that the amount was more than all but one acquisition Apple has ever made, there was probably always a zero percent chance Apple was going to go for that.

Enter Google.

The one leader in AI that is not technically a startup undoubtedly has a lot more flexibility when it comes to such deals. And that includes, apparently, making a model that Apple can run on their own Private Cloud Compute servers. (It undoubtedly helps that some of these servers may actually run in Google’s Cloud.) Google is clearly in it to win it, with regard to the AI business of their old friend.

And now, with the Search deal intact, this makes all the sense in the world. Because it sure sounds like Apple is viewing this updated Siri project as the future of search on their devices. Why not stick with the partner you’ve had since the iPhone was born? The one you can trust not to crash. Sure, there are undoubtedly privacy concerns — hence the request to run these models on your own servers — but there aren’t the same types of concerns as you might have with an AI “startup”. And again, Apple already deals with these with the Search deal.

And so Apple and Google are back, sitting in that tree…

Will it last? I mean, it depends on way too many factors to say right now. Including, by the way, sealing an actual deal and not just a deal to "evaluate and test" which is what the report states right now. But assuming that gets done, Google now also has to know that Apple is intending to do this whole AI thing on their own at some point. They'd be going into this eyes wide open this time.

It does lead to the obvious question of what’s in this for Google? But the answer may be tied to that ongoing and all-important Search relationship. And perhaps there’s some level of data Apple would be willing to share from their billions of devices back to Google to further refine their models — anonymized, of course. And there’s probably money. Just probably not $1.5B worth.

Also, maybe Apple just gives Google a discount on the money due for Search rev share?

I sort of love this for them. Both of them. Imagine an iPhone largely powered by Gemini. The Pixel team can’t love this notion, but Jimmy Fallon will be totally stoked regardless. And it’s the right move for Google. The iPhone is still the iPhone. The Pixel is not the iPhone. And for Apple. Siri is still Siri. Siri is not Gemini.

We are so back. They are so back.