Mar 18, 2024 - Business

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

photos of Tim Cook and Sundar Pichai side by side

Apple CEO Tim Cook (left) and Google chief Sundar Pichai. Photos: Justin Sullivan/Getty Images; Alex Kraus/Bloomberg via Getty Images)

Apple has been in talks to build Google's AI model, Gemini, into iPhones, according to Bloomberg.

Why it matters: Google would gain scale in the AI arms race if it had access to Apple's 2.2 billion active devices, the bulk of which are likely iPhones. For Apple, inserting gen AI features into smartphones could help rejuvenate demand for devices.

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.

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.

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