Apple’s AI Surrender: Giving Google the Keys To Siri

In a surprising yet pragmatic move announced on January 12, 2026, Apple (NASDAQ:AAPL) and Google (NASDAQ:GOOG) unveiled a multi-year partnership that places Google’s Gemini AI models at the core of the next generation of Apple Foundation Models. The collaboration will power a revamped, more personalized Siri and several Apple Intelligence features later this year.

But beyond product upgrades, the bigger question for investors is this: what does this mean for Apple’s $20 billion-a-year Google search deal—which is a near-pure-profit revenue stream for Apple?  That agreement has quietly been a pillar of Apple’s earnings power for years. The Gemini partnership may strengthen Apple’s AI capabilities in the short term, but it also subtly shifts leverage in Apple’s most lucrative relationship.

Image by Lukas Gehrer from Pixabay

Let’s be clear. For Google, this is a major win. Gemini gains white-labeled access to Apple’s two billion+ active devices, extending its reach far beyond Android and reinforcing its leadership in foundational AI. Alphabet’s stock rose over 1% on the news, pushing its market cap past the $4 trillion mark, and also ahead of Apple.

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A Shift in Power

Apple’s historical advantage has always been vertical integration. It owns the hardware, the silicon, the operating system, the services layer, and, critically, the user experience.

AI changes that equation.

By relying on Google’s Gemini as the foundational model layer, Apple is effectively outsourcing the “brain” of Siri to a direct competitor. Google’s business model is fundamentally built on data harvesting. While Apple will use technical safeguards to shield user data, the optics of routing queries through a Google-powered engine may weaken consumer trust for a company that has long emphasized privacy and end-to-end control.

This partnership also functions as a tacit admission that Apple has lagged in the generative AI race. After ChatGPT’s 2022 explosion, Apple’s slower, privacy-first approach led to Siri delays and a muted Apple Intelligence debut. By licensing Gemini as the “most capable foundation,” Apple effectively concedes it has not yet built a competitive frontier model in-house, despite being the world’s largest consumer technology company.

Relying on Google’s IP for Siri’s intelligence introduces vendor risk. Apple must now adapt to Google’s model evolution –  Apple’s AI roadmap is now partly tied to Google’s priorities, release cadence, and technical direction. Apple may also have to use Gemini versions that lag Google’s internal state-of-the-art, lagging Android/Pixel devices.

The $20 Billion Search Deal In An AI World

Historically, Google paid Apple to be on the iPhone. In the AI era, the flow of money could eventually flip, where Apple pays Google to keep its devices “smart.”

The Gemini tie-up subtly shifts the balance of power in their already-lucrative search arrangement. With Apple now reliant on Google’s AI for core ecosystem features, renegotiating default search status – which is already under antitrust scrutiny – becomes more complex. Reports suggest Apple may be paying upwards of $1 billion per year for Gemini access. While this is minimal relative to Google’s $20 billion+ payments, it effectively reduces the net value of the search deal and may give Alphabet stronger leverage in future negotiations.

More broadly, the value of traditional search itself is under pressure. AI agents increasingly bypass search results altogether by answering, acting, and transacting directly. That structural shift raises longer-term questions about the durability of Google’s roughly $20 billion annual payments to Apple as search evolves from a query-based model to an agent-driven one.

A Bridge to Apple’s Own Models

Despite the risks, the deal provides Apple with strategic advantages. A Gemini-powered Siri could finally deliver the intelligent, seamless experiences iPhone users expect, helping retain loyalty and reduce churn to rivals. This strengthens Apple’s services ecosystem, including the App Store, Apple Music, and iCloud, by making devices stickier through improved intelligence. Importantly, the agreement is non-exclusive and customizable, positioning it as a bridge rather than a surrender. Apple is very likely developing its own in-house model, but the real test will be whether this partnership merely buys time or deepens reliance on Google before that effort is ready.

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