According to Techmeme, Apple will reportedly pay Google around $1 billion per year for access to Gemini AI to power the new Siri. This comes as Apple collects a massive $20 billion annually from Google for search engine placement on iPhones. Meanwhile, Apple doesn’t pay OpenAI anything for their AI partnership, which industry observers describe as falling into the “you get what you pay for” category. If these numbers hold up, Apple appears to have scored an incredible deal given Google’s reported $100 billion investment in Gemini development over the past eight years.
The stunning AI math
Here’s the thing about these numbers – they’re absolutely wild when you step back. Apple pays Google $1 billion for AI access while collecting $20 billion from Google for search. That’s a net $19 billion positive for Apple. Basically, Google is paying Apple twenty dollars for every dollar Apple pays them. And Google has sunk over $100 billion into developing the very technology they’re now licensing to Apple for relative peanuts. It’s like renting out your $100 million mansion for $1 million a year while paying the owner $20 million annually to use their driveway.
The OpenAI wild card
Now the OpenAI part of this equation is particularly fascinating. Apple isn’t paying them anything, which as one observer noted falls into “you get what you pay for” territory. But what does that actually mean? Is Apple getting a less capable model? Or is OpenAI getting distribution and credibility that’s worth more than cash? Ben Bajarin suggests this might be the “deal of the year” for Apple if true. I mean, think about it – you’re getting cutting-edge AI from two different providers, one practically for free and the other at what amounts to a massive discount given the development costs.
Bigger strategic implications
This arrangement reveals something crucial about the current AI landscape. Google, despite their massive investment, needs distribution. Apple controls the most valuable real estate in tech – hundreds of millions of iPhones. As Mark Gurman reported, this isn’t just about technology – it’s about access to users. And Apple has proven repeatedly that they’re masters at making other tech giants pay for that access. Remember when everyone thought Apple was behind in AI? Turns out they might have been playing chess while others were playing checkers. They’re essentially getting their AI strategy funded by their biggest competitor.
Where this leaves everyone
So what does this mean for the future? Six Sigma Capital points out the sheer scale of Google’s AI investment versus what they’re charging Apple. This could signal that Google is desperate to get Gemini into more hands, or that Apple negotiated an absolutely brutal deal. Either way, it shows that hardware and distribution still rule in tech. You can spend $100 billion developing the best AI in the world, but if you don’t control the devices people use every day, you’re still at the mercy of companies like Apple. And that’s a lesson worth billions.
