Alphabet's Silence on the Google-Apple AI Deal: A Strategic Move or a Sign of Concern?
The tech world is abuzz with the recent Google-Apple AI partnership, but Alphabet, the parent company of Google, has remained conspicuously quiet about it. During a recent earnings call, an investor's question about Google's AI deal with Apple was met with silence, sparking curiosity and speculation. This silence could indicate a strategic move to carefully navigate the potential impact on its core business, which is increasingly focused on AI.
The Google-Apple relationship has been mutually beneficial. Google's search partnership with Apple has resulted in a $20 billion payment to Google for being the default search engine on Apple devices, as revealed in court filings. In return, Google gained access to Apple's massive customer base, with Apple boasting 2.5 billion active devices worldwide. However, the latest Apple AI deal is rumored to cost Apple around $1 billion annually, and the payoff for Google isn't as clear-cut as in the search business.
Google's AI Mode, which could represent the future of its search business, is still an experiment. The company announced last May that it would bring ads to AI Mode, but these tests place ads below or integrated into the chatbot's responses. Google is also experimenting with agentic shopping, including Shop with AI Mode, to guide consumers to a seamless checkout experience from the AI interface. Meanwhile, Google's AI competitor, Anthropic, is challenging the ad-supported AI business model with its upcoming Super Bowl ad, which could spark a heated debate in the industry.
During the earnings call, Alphabet's CEO, Sundar Pichai, only mentioned Apple's role as a 'preferred cloud provider' and its contribution to developing 'the next generation of Apple foundation models based on Gemini technology.' This minimal acknowledgment raises questions about Alphabet's stance on the partnership's long-term implications. The company's silence on the matter could be a strategic move to carefully assess the impact on its core AI business, leaving the industry to speculate and discuss the potential consequences.
