Alphabet’s CEO, Sundar Pichai, has dropped a significant piece of news during an ongoing antitrust trial: Google is negotiating a licensing agreement with Apple for its Gemini artificial intelligence (AI) engine. The deal would potentially bring Gemini to iPhones by the end of 2025. This development comes as Google and Apple face mounting competition in the AI sector, with generative AI technology becoming increasingly pivotal in their business strategies.
Pichai made these comments in a court hearing where the Department of Justice (DoJ) is investigating Google’s dominance in the internet search market. Google’s stock saw a dip, falling over 1%, while Apple’s stock managed a slight rise amidst broader market volatility. However, despite market fluctuations, the potential partnership between Google and Apple marks a significant shift in the tech landscape.
The Race for AI Dominance: Google vs. Apple
Google’s Gemini AI model is emerging as a strong competitor to OpenAI’s widely popular ChatGPT. While Google has faced criticism for its slow AI rollout, its new Gemini family of AI models represents a bold step forward. Pichai expressed confidence that a deal could be struck with Apple by mid-2025, positioning Gemini as a key player in Apple’s AI efforts. For context, Apple’s Siri has lagged behind in incorporating generative AI capabilities, which has led to some underwhelming results from users.
Apple introduced new AI features last year under the banner “Apple Intelligence,” but many users were disappointed with its performance. Despite this, Apple has already established a deal with OpenAI, leveraging the company’s ChatGPT technology to enhance its own offerings. With Google now stepping into the mix, the potential licensing deal could significantly bolster Apple’s AI portfolio, helping it compete with other tech giants.
Apple’s AI Strategy and Future AI Collaborations
During the court hearing, Pichai also shared insights from discussions with Apple CEO Tim Cook, who confirmed that Apple plans to roll out more third-party AI models on its “Apple Intelligence” platform later this year. This further solidifies Apple’s commitment to improving its AI offerings. The potential inclusion of Google’s Gemini AI engine could be a game-changer, but it also signals deeper integration between these two tech titans, especially as both companies vie for supremacy in the generative AI space.
Antitrust and the Future of Google’s Search Business
The backdrop of this licensing deal comes amid an ongoing antitrust case in which the Department of Justice has accused Google of maintaining a monopoly over online search services. The case centers on Google’s multibillion-dollar payments to Apple for the exclusive use of its search engine on iPhones. Federal Judge Amit Mehta ruled last year that Google’s actions had unfairly stifled competition and that corrective measures would need to be implemented.
As part of the trial, Pichai discussed possible remedies, with the DoJ seeking penalties that could include forcing Google to sell its Chrome browser or potentially restructuring its relationship with Apple. Although Judge Mehta is expected to make a ruling on penalties by August, the ongoing investigation is closely watched by both companies and investors alike.
Google’s Competitive Edge in AI
Despite these legal challenges, Google remains a dominant force in the AI race, competing with OpenAI, Meta Platforms, and other tech giants to develop new AI models. In March, Google unveiled its latest AI model, Gemini 2.5, which has received positive reviews from early testers. This model promises to be another step forward in Google’s pursuit of AI leadership, especially with its focus on advancing generative AI capabilities.
Stock Market Reaction: Google vs. Apple
The news surrounding the licensing deal has had mixed reactions in the stock market. On the day of the announcement, Google stock dipped by more than 1%, closing at 157.52, while Apple’s stock saw a modest rise to near 212. Despite this, Google continues to be considered one of the top AI stocks to watch. Alphabet’s stock holds an IBD Composite Rating of 80 out of a best-possible 99, reflecting strong technical and fundamental performance. However, the neutral Accumulation/Distribution Rating of “C” suggests that institutional investors have had mixed interest in Google stock over the past several months.
What to Expect from Google and Apple
With the potential licensing agreement between Apple and Google, it’s clear that both companies are positioning themselves to take a leading role in the AI industry. However, the ongoing antitrust case and the looming potential penalties add a layer of complexity to their business dealings. Pichai’s statement about the Apple deal, while hopeful, still depends on many factors, including the final antitrust rulings and the broader competitive landscape in the AI and search engine markets.
As these two companies continue to innovate, it will be interesting to see how they navigate both the technological and legal challenges ahead. The evolving relationship between Google and Apple, especially in the realm of AI, could significantly shape the future of both companies in the years to come.