What Apple’s OpenAI deal means for Google: Morning Brief

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Now that Cupertino has revealed its AI plans, the relationship between friends Apple and Google has become more complicated.

This is because rivals, sometimes gadgets, function as partners when it comes to online search and advertising. But the partnership, which featured heavily in a landmark antitrust case against Google’s dominance of the search engine market, will come under new pressure as AI changes the way people search for information online.

For more than two decades, Apple has set Google as the default search engine in its Safari browser. Apple directs traffic from its huge user base to Google’s search business. And in exchange for the default privilege, Google pays the iPhone maker about $18 billion a year.

But Apple, to the delight of investors, has another deal in the works. Enter Sam Altman.

Apple is partnering with OpenAI to bring ChatGPT to the iPhone. It’s part of a bold effort to catch up to Big Tech rivals that have gone all-in on AI. Later this year, iPhone users will have free access to the chatbot, which will integrate with Siri and other apps, giving people access to a repository of knowledge and granting OpenAI a ticket to AI technology integration.

Apple iPhones with increasingly capable versions of ChatGPT would lessen the need to use Google search. If a significant number of users start interacting with the web primarily through Siri rather than a search bar, even the strong influence of default status could mean very little for the future of search traffic.

Apple’s alliance with OpenAI comes at a crucial time for Google’s own AI ventures.

The search giant recently launched its new feature, AI Overviews, which provides users with concise answers to their search queries without having to click through the web. But Overviews, along with a previous imaging tool, was met with almost instant criticism when users discovered that the AI ​​features were producing absurd or incorrect information.

The troubled debuts shaped a pattern of failed launches. They fed the narrative that Google’s rush to plant its AI flag reflected mismanagement and strategic weakness. Deeper issues are also at stake.

If chatbots and other software powered by large language models (LLMs) are as transformational as technology executives claim they are, the search business is poised for major disruption.

Each new deal that OpenAI strikes with media and technology companies can be seen as an attempt to strengthen an alternative to search, diverting attention from the Google empire.

The story continues

Apple could still team up with Google, of course, perhaps eventually attracting Gemini, Google’s suite of generative AI models, even as it continues to develop in-house AI technology.

Apple’s OpenAI collaboration doesn’t overshadow its long union with Google. But it adds a wrinkle to the relationship. In this early phase of a new technological paradigm, a new set of standards is available.

Hamza Shaban is a Yahoo Finance reporter covering markets and economics. Follow Hamza on Twitter @hshaban.

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