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Alphabet and Apple shares rise after news breaks of possible deal to license Gemini AI on iPhone

The two companies are in active negotiations to implement new features in the software of this year's iPhone model.

Google Gemini

(PAU BARRENA / AFP / Voz Media)

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Alphabet shares rose more than 7% and Apple shares more than 2% following a Bloomberg report that the companies are in talks to license Gemini, a generative artificial intelligence chatbot developed by Google, for future iPhones.

"The two companies are in active negotiations to let Apple license Gemini, Google’s set of generative AI models, to power some new features coming to the iPhone software this year, said the people, who asked not to be identified because the deliberations are private. Apple also recently held discussions with OpenAI and has considered using its model, according to the people," Bloomberg said.

In that regard, the newspaper explained, "A deal would give Gemini a key edge with billions of potential users. But it also may be a sign that Apple isn’t as far along with its AI efforts as some might have hoped."

Similarly, Bloomberg indicated that this would be a win-win for both companies:

Apple is preparing new capabilities as part of iOS 18 — the next version of the iPhone operating system — based on its own AI models. But those enhancements will be focused on features that operate on its devices, rather than ones delivered via the cloud. So Apple is seeking a partner to do the heavy lifting of generative AI, including functions for creating images and writing essays based on simple prompts.

According to Bloomberg, the negotiation is also under the scrutiny of regulators. It reported that Google's current agreement with Apple is already facing a lawsuit from the Department of Justice.

The government has alleged that the companies have operated as a single entity to corner the search market on mobile devices. The pair has justified the arrangement by saying Apple believes Google’s search quality is superior to rivals and that it’s easy to switch providers on the iPhone.
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