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alphabet The company will report earnings on Wednesday, but investors will want more details about the company’s transactions. apple Google’s Gemini artificial intelligence technology will be used to revamp the Siri virtual assistant.
Wall Street expects Google to report a 15% year-over-year increase in fourth-quarter revenue, but much of the focus in the company’s earnings call will be on new details about its partnership with Siri and Gemini, analysts told CNBC.
Wednesday’s earnings call will be the first time Alphabet executives have addressed shareholders since Apple announced in January that it had selected Gemini as the AI technology to power its Siri overhaul. The deal is one of Gemini’s most significant yet, and even if the search giant cannot obtain specific user data, the size of Apple’s user base (2.5 billion active devices) is important to Google, analysts said.
“There will be critical mass, and even if you’re not going to capture consumer information, you might be able to see what kind of queries are being asked. That could help train Google’s AI models,” said Gil Luria, managing director at technology research firm DA Davidson.
But there are still many unanswered questions about what this partnership means.
The multi-year partnership will rely on Google’s Gemini and cloud technologies for future Apple base models, the companies announced. In a joint statement from the two companies, Apple said it “determined that Google’s AI technology provides the most capable foundation for Apple Foundation Models,” adding that the company is “excited about the innovative new experiences” that Gemini will “unlock for Apple users.”
The companies said the functionality of the Apple Intelligence suite will continue to run on Apple devices and the iPhone maker’s private cloud. Apple Intelligence includes Siri, Apple’s AI writing tool, and Genmoji, the company’s emoji creation feature.
Apple CEO Tim Cook talked about the partnership with CNBC’s Steve Kobach last week as the company announced its latest quarterly results. Cook said Siri powered by Gemini will be personalized to the user, but added that it doesn’t know what the user’s “Gmail or whatever” is.
Cook added that Siri “knows a lot” and said Apple plans to share more detailed information once the latest version of Siri is released.
Google CEO Sundar Pichai (left) and Apple CEO Tim Cook listen to then-President Joe Biden speak during a roundtable with American and Indian business leaders in the East Room of the White House on June 23, 2023.
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The companies haven’t disclosed much else, but Bloomberg reported in November that Apple plans to pay Google about $1 billion a year for the partnership, although the two companies have not yet confirmed the terms of the deal.
Apple and Google are used to working together. Google has been the default search engine on Apple devices since before the iPhone was launched in 2007, and the search company is estimated to pay the iPhone maker about $20 billion a year for its prominent placement.
The agreement was briefly called into question after Google was found to hold an illegal internet search monopoly in 2024, but a federal judge ultimately allowed it to continue.
“The relationship between Google and Apple through search has been beneficial for both companies, as seen in this partnership,” Luria said.
A Gemini-powered version of Siri is expected to arrive as early as February, according to a Bloomberg report in January, which also reported that Apple plans to rely on Google’s infrastructure for AI capabilities later this year. This would mark a departure for Apple, which runs its functions on encrypted cloud infrastructure. Analysts say the move is likely to be valuable for Google, giving it access to more user data.
“We’re bringing intelligence to what people like and integrating it into the entire operating system in a personal and private way,” Cook told analysts last week.
Analysts said it would be an even bigger win for the search company if Apple made extensive use of Google’s computing infrastructure for its AI overhaul. It also raises the question of how much Google intends to expand its chip business, said Michael Nathanson, co-founder of equity research firm Moffett Nathanson.
“If Apple used their own silicon, it would be much bigger,” Nathanson said of Google’s Ironwood tensor processing unit, which has attracted high-profile customers including: Meta And humanity. Google reports revenue from silicon services through its cloud division.
Citi research analysts wrote in a recent note that the deal with Apple “underlines the core benefits of Gemini, Google’s AI around growing computing infrastructure and hardware.”
Analysts said Apple’s choice of Google over OpenAI and other AI startups was a defensive victory for the search giant.
Apple is currently partnering with OpenAI to integrate AI startup ChatGPT with Siri and Apple Intelligence. As part of that deal, Siri hands off complex queries to ChatGPT. It’s unclear what the partnership with Google means for ChatGPT integration.
“There was a lot of concern on Wall Street that Apple was going to fall into the hands of OpenAI and Perplexity,” Nathanson said. “That doesn’t really happen now.”
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