In a surprising move, Alphabet, the parent company of Google, is keeping mum about its AI deal with Apple, even when pressed by investors. During the recent quarterly earnings call, an analyst's question regarding Google's AI partnerships, specifically with Apple, was met with silence.
This strategic silence speaks volumes. It indicates that Alphabet is cautious about revealing how this collaboration might affect its core AI-centric business. The Google-Apple alliance has historically been a lucrative one. The search partnership between the tech giants resulted in Google paying Apple a staggering $20 billion to secure its position as the default search engine on Apple devices, as revealed by the Department of Justice's lawsuit. This deal granted Google access to Apple's vast customer base, which boasts an impressive 2.5 billion active devices worldwide.
The recent AI deal between Apple and Google is rumored to cost Apple $1 billion annually, but the benefits for Google are less apparent compared to the search partnership. In Google Search, advertisers' links appear prominently at the top of search results. However, in AI Mode, which may shape the future of Google's search business, ads are still in the experimental phase and are integrated into chatbot responses.
Google is also exploring agentic shopping, such as Shop with AI Mode, to streamline the consumer journey from product discovery to checkout. Meanwhile, Google's AI competitor, Anthropic, is making waves with its upcoming Super Bowl ad, directly challenging the ad-supported AI business model embraced by OpenAI and Google.
The long-term implications of these developments remain uncertain, leaving investors and industry observers with more questions than answers. And here's where it gets intriguing: Why is Alphabet so tight-lipped about this deal? Could it be that the partnership's impact on Google's AI ambitions is more significant than meets the eye?
During the earnings call, Alphabet's CEO Sundar Pichai merely expressed satisfaction with Apple's choice of Google as its 'preferred cloud provider' for developing the next generation of Apple foundation models based on Gemini technology. Google's Chief Business Officer, Philipp Schindler, echoed this sentiment.
Sarah Perez, a seasoned reporter for TechCrunch since 2011, brings her expertise in technology and business to this story. She can be reached at sarahp@techcrunch.com or via encrypted message on Signal at sarahperez.01.
