The Deal

Apple is paying Google about $1 billion annually for access to an ultrapowerful AI model. The 1.2 trillion parameter system will help run Apple's long-promised Siri overhaul.

The companies are finalizing an agreement after an extensive evaluation period. Apple's move represents a major acknowledgment that it has fallen behind in AI.

Both stocks jumped on the news Wednesday. Apple gained less than 1% to $271.70, while Alphabet rose as much as 3.2% to $286.42.

Why Google Won

Apple tested several alternatives before choosing Google. The company evaluated OpenAI's ChatGPT and Anthropic's Claude alongside Google's Gemini.

Google's 1.2 trillion parameter model vastly exceeds Apple's current capabilities. The iPhone maker's existing cloud-based Apple Intelligence uses just a 150 billion parameter model.

The custom Gemini system will handle Siri's summarizer and planner functions, providing significantly more power to process complex data and understand context.

The Interim Plan

Apple views this as a temporary solution. The company is working on its own 1 trillion parameter cloud-based model that could be ready for consumer applications as early as next year.

Known internally as Glenwood, the Siri rebuilding effort is led by Vision Pro headset creator Mike Rockwell and software engineering chief Craig Federighi. The new voice assistant, code-named Linwood, is planned for iOS 26.4 next spring.

Privacy Protection

The Google model will run on Apple's Private Cloud Compute servers. This ensures user data remains walled off from Google's infrastructure.

Apple has already allocated AI server hardware to power the model. The setup keeps Google as a behind-the-scenes technology supplier rather than a visible partner.

Not a Public Partnership

Apple won't promote this partnership publicly. That makes it different from the Safari browser deal where Google serves as the default search engine.

The agreement is also separate from earlier discussions about integrating Gemini directly into Siri as a chatbot. Those talks came close in 2024 and earlier this year but never materialized.

CEO Tim Cook said on Apple's recent earnings call that Siri could eventually offer additional chatbots beyond the current ChatGPT option.

The Bigger Picture

Apple isn't alone in adopting Gemini. Snap and several other major companies are building on Google's Vertex AI platform.

But for Apple, the move carries extra weight. The company has long prided itself on developing core technologies in-house. Turning to Google for such a critical component of Siri signals how far behind Apple has fallen in AI.

The Bottom Line

Apple is paying Google $1 billion annually to power Siri's AI upgrade because its own models aren't ready yet, marking a rare admission that the iPhone maker needs outside help to compete in artificial intelligence. The partnership keeps Google behind the scenes while Apple works to catch up with its own technology by next year.