Google AI on the iPhone could draw regulators

What they're saying: Antitrust expert Charles Rule, a former Justice Department official, says the reported partnership would appear problematic, although we don't yet know the exact terms of any deal.

• "There's a real risk that it shuts out all of the competitive promise that generative AI has as a competitor to traditional search," Rule told Axios.

Catch up quick: Bloomberg reported Monday that Apple is in talks with Google on a deal that would see Gemini built into the iPhone. Apple has also had talks with ChatGPT maker OpenAI, Bloomberg reported.

• An Apple representative declined to comment, and Google had no comment.

Reality check: Any generative AI deal between Google and Apple could take a variety of forms.

• It could massively expand on the core search deal between the two firms.
• Or Apple could use Google's technology to power a discrete app or experience, which would be less likely to raise antitrust concerns.

Between the lines: A federal judge is already weighing whether Google has abused a monopoly in the search business through its deals with service providers and device makers, a case in which the Apple-Google search deal played a prominent role. A ruling is expected some time this year.

• Meanwhile, the Federal Trade Commission is taking a look at other big business partnerships in the AI space — including Microsoft's significant stake and commercial relationship with OpenAI, as well as investments in Anthropic by Google and Amazon.

Yes, but: If Apple went with OpenAI rather than Google, it could still face scrutiny, given concerns around the Microsoft-OpenAI partnership.

• However, Rule said that, at least on the surface, such a deal would be "an order of magnitude" less problematic.
• "I can't say that there wouldn't be an issue," Rule said.
• Other antitrust experts told Axios there are already too few companies controlling the future of tech and they should be made to compete rather than being allowed to partner with one another.

The big picture: Outside groups aren't waiting for a deal to be announced to weigh in.

• "Apple is openly colluding with Google in an effort to block out competition and protect monopoly power for itself and closest 'rival,'" said Sacha Haworth, executive director of the Tech Oversight Project, a group that encourages stronger antitrust regulation of large technology companies.

Zoom out: A Google deal could leave Apple vulnerable if, in relying on an outside firm, it misses the opportunity to lead on what many see as the next major wave of tech.

• While it has yet to commercialize generative AI in a significant manner, Apple has been investing heavily in the space, through both acquisitions and its own research, including a paper published last week. CEO Tim Cook has promised the company would have more to say later this year.

One key question is whether Apple would use Gemini as a bridge until its own technology is ready or rely on Google long term.

• In search, Apple has explored whether to operate its own search engine or partner with Microsoft's distant No. 2 engine, Bing — but it continues to stick with its lucrative deal with Google.

Our thought bubble: Should it choose — or be forced — to go it alone, Apple could have an opening to develop AI models that better respect both privacy and intellectual property.

• Apple has long touted its efforts to protect user privacy by processing personal information on the phone rather than in the cloud wherever possible.
• Many observers believe that handling some AI queries on the device can also improve performance and reduce environmental impacts.