According to Techmeme, Apple will reportedly pay Google approximately $1 billion annually for access to Gemini AI technology to power the new Siri. This comes as Robinhood reported Q3 revenue up 100% year-over-year to $1.27 billion versus $1.19 billion estimates, with transaction-based revenue jumping 129% to $730 million versus $739 million estimates. Robinhood’s net income surged 271% to $556 million. The Apple-Google AI partnership, reported by Mark Gurman, exists alongside Apple’s existing $20 billion annual revenue from Google for search placement. Meanwhile, Apple doesn’t pay OpenAI for their AI relationship, which reportedly falls into the “you get what you pay for” category.
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Deal of the Century
Let’s just state the obvious here – if this reporting is accurate, Apple basically scored the deal of the decade. Think about it. Google has reportedly invested over $100 billion in Gemini development over the past eight years. And Apple gets access to that technology for roughly 1% of that investment? That’s insane leverage. Meanwhile, Apple collects $20 billion annually from Google just for search placement on iPhones. So basically, Apple is getting paid twenty times what they’re paying Google. The math here is so lopsided it’s almost comical.
Competitive Landscape Shift
This fundamentally changes the AI arms race. Apple was clearly behind in AI development – everyone knew it. But instead of spending tens of billions playing catch-up, they’re essentially renting Google’s technology for pennies on the dollar. And Google? They get another revenue stream while potentially cementing their AI as the default on billions of Apple devices. But here’s the thing – does this make Google the infrastructure provider while Apple controls the user experience? That’s the real question. As Ben Bajarin noted, the dynamics here are fascinating because Apple maintains control of the customer relationship while Google does the heavy lifting.
What About OpenAI?
The OpenAI relationship is particularly interesting here. According to the reporting, Apple doesn’t pay OpenAI at all – it’s more of a “you get what you pay for” arrangement. That suggests OpenAI gets distribution and data, while Apple gets… well, whatever free gets you. This creates a weird three-way dynamic where Apple can play Google and OpenAI against each other. Mark Gurman’s reporting indicates this isn’t an exclusive deal, meaning Apple could still integrate multiple AI models. That gives them incredible negotiating power going forward.
Broader Market Implications
Looking at the bigger picture, this deal shows that even in the AI gold rush, distribution and user base still reign supreme. Apple has the users – over a billion active devices – and that gives them negotiating power that’s almost unmatched. Meanwhile, companies like Robinhood are showing that retail trading and crypto are driving massive revenue growth, with Six Sigma Capital noting the impressive transaction-based revenue numbers. But the real story here is how Apple turned what looked like an AI weakness into a strategic masterstroke. They’re paying essentially pocket change for access to world-class AI while maintaining their premium user experience. That’s business execution at its finest.
