Apple and Google's Potential Gemini AI Licensing Deal Seen as Mutually Beneficial

Published March 18, 2024

Gene Munster, the managing partner at Deepwater Asset Management, believes that a rumored deal between tech giants Apple and Google could be advantageous for both parties. At the heart of the discussions is Google's Gemini, an advanced generative AI model that Apple is reportedly considering for incorporation into its iPhone software enhancements. Such an integration could catapult Apple to the forefront of the personalized AI experience.

The Deal in the Making

Despite the deal being in its preliminary stages, with many of the terms still under negotiation, the implications are substantial for both companies. Apple's adoption of Gemini might necessitate sizeable yearly payments to Google and bring Google's AI technology to Apple's extensive user base, which includes approximately 1.4 billion active devices. Munster anticipates that Apple will strive to rebrand the AI model rather than use the Gemini name, a move that is consistent with Apple's branding strategy.

Implications for Competition and Regulation

The potential partnership, which aligns with past expressions from Apple CEO Tim Cook and Google CEO Sundar Pichai to 'work as one company,' could also draw the attention of antitrust regulators due to the competitive dynamics between the two tech behemoths. As direct competitors with their own smartphone operating systems, a collaboration of this scale may have regulatory implications.

On the sidelines, Google's development of the Gemini AI models signifies their ambition to vie with Apple in the burgeoning AI sector. At the same time, Apple has been incrementally enhancing its AI capabilities, largely through acquiring AI startups, particularly those focused on generative AI technology.

The potential licensing agreement points to the growing influence of AI within the technological landscape and highlights the competition to dominate this ever-evolving field.

Market Reaction

The news of the potential deal has resonated in the stock market as well; Apple's stock experienced a modest rise, while Alphabet Inc Class A shares saw a more significant uptick. Investors and market spectators will be watching closely as the companies negotiate and potential deals come to fruition.

Apple, Google, AI