Outsourcing the aiPhone – At Least to Start...
Mark Gurman
Another potentially massive scoop for Mark Gurman:
Apple Inc. is in talks to build Google’s Gemini artificial intelligence engine into the iPhone, according to people familiar with the situation, setting the stage for a blockbuster agreement that would shake up the AI industry.
The two companies are in active negotiations to let Apple license Gemini, Google’s set of generative AI models, to power some new features coming to the iPhone software this year, said the people, who asked not to be identified because the deliberations are private. Apple also recently held discussions with OpenAI and has considered using its model, according to the people.
I have absolutely no idea if this is true but I'm sort of surprised this type of deal hasn't been rumored before. On the surface, it makes a lot of sense. Sure, Apple wants to own and operate all of their own technology, but they often start out by partnering. We can argue if Apple is actually "behind" in terms of the productization of AI – it still feels awfully early – but they're almost certainly behind in building out any fundamental models.
While they clearly have projects along these lines internally and they have been doing some really interesting work behind-the-scenes, if nothing else, they likely lack the data currently needed to make such LLMs sing. That could and would change if their AI is suddenly embedded in billions of devices, but we're not there yet. Again, partnering, at least at some level, likely makes sense out of the gate.1
The real surprise here may be a potential partnership with Google. But as Gurman notes, they already partner on a key tie-up for both companies: Google Search on the iPhone. This could be an extension of that. Or it could be something slightly newer: some sort of AI app baked into iOS 18 and powered, at least in part by Gemini? Or perhaps even weaving AI into many of the current Apple products – Safari, Photos, the iSuite, etc. Again, some of this work Apple will want to do with its own technology, but for some of it, it likely makes sense to partner.
The generative AI features under discussion would theoretically be baked into Siri and other apps. New AI capabilities based on Apple’s homegrown models, meanwhile, would still be woven into the operating system. They’ll be focused on proactively providing users with information and conducting tasks on their behalf in the background, people familiar with the matter said.
So yes, that reads as if their home-grown AI would power certain iPhone capabilities on device, while they outsourced AI would focus on areas that go beyond the device and call to the cloud. And it's of course possible that Apple even partners with several different AI players for such things, just as Yahoo powers their stock information, while Google does search.
Would this be enough to please Wall Street? It depends on how Apple implements AI into the iPhone – that is, how Apple does what they typically do best: productize. To date, OpenAI has been the best at turning these new technologies into a compelling set of end products. And Microsoft, of course, has been riding on the back of that. But something Apple this way comes...
1 One potential stumbling block here would be just how much data Apple would be willing to share with any would-be partner. Perhaps it ends up as simple as transmitting data via APIs as needed for certain types of AI work, but not allowing anything on device to be transmitted.