Apple, Google stocks jump on reported talks of iPhone/Gemini AI partnership

In other words, "This partnership, should it come to fruition, makes a massive amount of sense for both sides," tech analyst Ben Thompson wrote this morning in Stratechery.

• Investors agreed, with Google shares closing up 4.4% Monday. Apple jumped over 2.7% before finishing up 0.6%.

The tech giants already have a longstanding partnership, with Google paying to serve as the default search engine on Apple's Safari browser and the iPhone.

• But that could also complicate the regulatory picture: The deal has played a big role in the Department of Justice's antitrust lawsuit against the search giant.

More broadly, any AI deal from Apple will likely attract regulator scrutiny.

• The FTC is already looking into huge AI investments by Microsoft, Amazon and Google.
• And the agency also just launched an inquiry into Reddit's licensing of user data to AI companies.

Zoom in: Apple has been developing its own generative AI models, as further evidenced by a paper published last week.

• And, as Bloomberg has reported, the company is also pushing to see what features it can put into its next mobile operating system, iOS 18, expected later this year.

The intrigue: The company is looking to Gemini, or another gen AI platform, to handle features such as creating images and writing essays from text prompts, per Bloomberg.

• Apple has also reportedly held talks with OpenAI.

What we're watching: The report comes ahead of Apple's developer conference in June.

• CEO Tim Cook has teased an announcement coming "later this year."