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Alphabet reports earnings Wednesday, and investors will be looking for more details on the company’s deal with Apple to revamp the Siri virtual assistant with Google’s Gemini artificial intelligence technology.
While Wall Street is expecting Google to report a 15% year-over-year increase in its fourth-quarter revenue, much of the attention during the company’s earnings call will be on any new details about the Siri-Gemini deal, analysts told CNBC.
The earnings on Wednesday will be the first time Alphabet’s leadership address shareholders since Apple in January announced that it had chosen Gemini as the AI technology to power the company’s Siri overhaul this year. The deal represents one of the most prominent yet for Gemini, and the scale of Apple’s user base — 2.5 billion active devices — is important for Google, even if the search giant doesn’t get specific user data, analysts said.
“They’ll have critical mass, and even if they’re not going to get consumer information, maybe they’ll be able to see what queries are being asked, which could help Google train its AI models,” said Gil Luria, managing director at technology research firm D.A. Davidson.
However, there are still many unanswered questions about what the partnership entails.
What the companies have said is that the multiyear partnership will lean on Google’s Gemini and cloud technology for future Apple foundational models. A joint statement from the companies said Apple had “determined that Google’s AI technology provides the most capable foundation for Apple Foundation Models,” adding that the company was “excited about the innovative new experiences” that Gemini “will unlock for Apple users.”
The companies said the Apple Intelligence suite of features will continue to run on Apple devices and the iPhone maker’s private cloud. Apple intelligence includes Siri as well as Apple’s AI writing tools and Genmoji, the company’s emoji creation feature.
Apple CEO Tim Cook discussed the partnership with CNBC’s Steve Kovach last week when the company reported its latest quarterly earnings. Cook said the Gemini-powered Siri will be personalized for users, but he added that it won’t know users’ “Gmail and stuff like that.”
Cook added that Siri will “know a lot” and said Apple plans to share more details when the updated Siri is released.
Google CEO Sundar Pichai, left, and Apple CEO Tim Cook listen as then-President Joe Biden speaks during a roundtable with American and Indian business leaders in the East Room of the White House, June 23, 2023.
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The companies have not shared much else, but Bloomberg reported in November that Apple is planning to pay Google about $1 billion a year for the arrangement, though the companies have yet to confirm the deal’s terms.
Apple and Google are no strangers to working together. Google has been the default search engine for Apple devices since before the iPhone was released in 2007, and the search company is estimated to pay the iPhone maker about $20 billion a year for that prominent placement.
That arrangement briefly came into question after Google was found to hold an illegal internet search monopoly in 2024, but the federal judge ultimately allowed the deal to continue.
“The Google-Apple relationship from search was instrumental for both companies, as we’re seeing with this deal,” Luria said.
A Gemini-powered version of Siri will come as soon as February, according to a January Bloomberg report, which also said that Apple will be leaning on Google’s infrastructure for AI features later this year. That would represent a departure for Apple, which runs its features on its encrypted cloud infrastructure. The move would be valuable for Google, which would likely get access to more user data, analysts said.
“We’re bringing intelligence to more of what people love, and we’re integrating it across the operating system in a personal and private way,” Cook told analysts last week.
If Apple does use Google’s compute infrastructure broadly for its AI overhaul, that would represent an even bigger win for the search company, analysts said. It also poses the question of how much Google plans to scale its chip business, said Michael Nathanson, co-founder of equity research firm Moffett Nathanson.
“Apple using its silicon would give it more scale,” Nathanson said of Google’s Ironwood tensor processing units, which have gained notable customers, including Meta and Anthropic. Google reports revenue from its silicon services through its cloud unit.
The Apple deal “underscores Google’s core AI advantages led by Gemini, its growing compute infrastructure and hardware,” wrote Citi research analysts in a recent note.
Analysts said Apple choosing Google over OpenAI and other AI startups is a defensive win for the search giant.
Apple is currently partnered with OpenAI for an integration of the AI startup’s ChatGPT with Siri and Apple Intelligence. As part of that arrangement, Siri hands off complicated queries to ChatGPT. It’s unclear what the Google partnership means for the ChatGPT integration.
“There was a real concern on Wall Street that Apple would run into the arms of OpenAI or Perplexity,” Nathanson said. “That’s not really gonna happen now.”
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