Apple's $1 Billion AI Shock Deal: Siri Gets Supercharged by Google's Gemini

This article first appeared on GuruFocus.

Apple Inc. (NASDAQ:AAPL) is on the verge of finalizing a landmark artificial intelligence partnership that could redefine how its voice assistant operates. According to people familiar with the matter, the company plans to spend roughly $1 billion annually to license Alphabet Inc.'s Gemini model a powerhouse with 1.2 trillion parameters to underpin the next-generation version of Siri. After months of testing models from OpenAI and Anthropic, Apple zeroed in on Google's technology as the most capable short-term solution while it continues developing its own 1-trillion-parameter system. The upgraded Siri, expected next spring, could mark Apple's most ambitious AI integration since the debut of Apple Intelligence.

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Under the deal, Gemini will handle Siri's more complex tasks the summarizer and planner functions that determine how to interpret and execute user requests while simpler processes remain in Apple's ecosystem. Internally codenamed Linwood, the project is being overseen by Vision Pro creator Mike Rockwell and software chief Craig Federighi. To preserve user privacy, the model will run exclusively on Apple's Private Cloud Compute servers, keeping Google's access limited. Despite the scale of this collaboration, Apple reportedly plans to keep the relationship low-profile, treating Google as a technology supplier rather than a visible partner, unlike their Safari search agreement.

Investors reacted swiftly. Apple's shares edged up less than 1% to $271.70, while Alphabet (NASDAQ:GOOG) climbed as much as 3.2% to $286.42 following the report. The move signals Apple's recognition that catching up in generative AI may require temporary reliance on external technology. Still, insiders say the company views Gemini as a bridge not a destination. Apple's in-house AI team continues to push toward self-reliance, building a model that could rival Gemini's quality. In markets like China, where Google services are restricted, Apple intends to deploy its own models with localized content filters developed alongside Alibaba and has also explored collaboration with Baidu Inc.

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