Alphabet, Google’s parent company, sidestepped a direct question from an investor regarding its artificial intelligence partnership with Apple during its fourth-quarter earnings call on Wednesday, . The avoidance raises questions about how the tech giant views the impact of this collaboration on its core AI-focused business.
The relationship between Google and Apple has been a long-standing, financially significant one. Recent filings revealed in the Department of Justice’s antitrust lawsuit against Google showed that Apple received approximately $20 billion from Google to remain the default search engine on Apple devices. This arrangement provided Google access to Apple’s substantial user base, which currently stands at 2.5 billion active devices worldwide, as announced by Apple last quarter.
While the financial benefits of the search engine deal are clear, the implications of the new AI partnership are less so. The current agreement to power Siri with Google’s Gemini model is rumored to cost Apple around $1 billion annually. However, the return on investment for Google isn’t immediately apparent in the same way It’s with search advertising.
Google is currently experimenting with integrating advertisements into its AI Mode, the chatbot-style interface for Google Search. These ads are currently positioned below or integrated within the chatbot’s responses, rather than appearing prominently as they do in traditional search results. The company is also exploring “agentic shopping” features, including “Shop with AI Mode,” designed to guide users through product searches and facilitate seamless purchases directly within the AI interface. These initiatives, announced in and further developed by , represent an attempt to monetize AI-driven interactions.
The reluctance to discuss the Apple deal in detail during the earnings call is notable, especially as competitors like Anthropic are actively positioning themselves against Google’s ad-supported AI model. Anthropic is set to launch a Super Bowl advertisement challenging the business models of both OpenAI and Google, suggesting a broader industry debate about the future of AI monetization.
During the earnings call, Alphabet executives offered minimal commentary on the Apple partnership. Sundar Pichai, Google’s CEO, simply stated he was “pleased that Apple’s preferred cloud provider” and would be assisting in the development of “the next generation of Apple foundation models based on Gemini technology.” Google’s Chief Business Officer, Philipp Schindler, echoed this sentiment verbatim, further highlighting the company’s guarded approach to discussing the specifics of the collaboration.
The lack of detailed discussion suggests Alphabet is carefully considering how to frame its AI partnership with Apple. The company may be hesitant to reveal strategic details that could impact its core business, particularly as it navigates the evolving landscape of AI monetization and faces increasing competition. The current experimentation with ads in AI Mode indicates that Google is still exploring viable revenue models for its AI offerings, and the Apple deal may represent a complex variable in that equation.
The long-term implications of this partnership remain unclear. While the financial contribution from Apple is substantial, the broader impact on Google’s AI strategy and its ability to effectively monetize AI-powered services is still an open question. The company’s cautious response during the earnings call underscores the strategic sensitivity surrounding this collaboration and its potential to reshape the future of both Google and Apple’s AI endeavors.
