Why Google Needed This Deal More Than Apple

https://www.cnbc.com/2026/01/12/apple-google-ai-siri-gemini.html
https://www.reuters.com/business/google-apple-enter-into-multi-year-ai-deal-gemini-models-2026-01-12/
https://www.bbc.co.uk/news/articles/czdqvp2zqezo
https://techcrunch.com/2026/01/12/googles-gemini-to-power-apples-ai-features-like-siri/
https://fortune.com/2026/01/13/apple-ai-deal-with-google-gemini-means-for-google-apple-openai/

Apple and Google quietly announced they'd enter into a multi-year collaboration. The headline seemed straightforward: Apple would use Google's Gemini AI to power Siri. After three delays and years of missed promises, Apple finally had an AI upgrade. But this framing misses the real story.

Google needed this deal far more than Apple did. And that asymmetry reveals something profound about how the AI era threatens to reshape the entire technology industry.

Apple's AI Stumble: A Story of Perfectionism

Start with Apple's failure. It's important because it sets up why Google had to step in.

In June 2024, Apple promised something bold: Siri would finally become intelligent. After fifteen years of being the industry's punchline—a voice assistant stuck in 2011—Apple announced it would overhaul Siri with advanced reasoning, personalization, and real smarts. The company had been quietly building "Apple Foundation Models" for years. The ambition was there. The technology existed.

Then, nothing.

In March 2025, Apple quietly announced the launch was delayed. Craig Federighi, Apple's Senior Vice President of Software, explained that their internal version "didn't meet customer expectations or Apple standards." This wasn't a technical limitation. It was an execution failure. Apple had chosen perfectionism over progress, and now it was paying the price.

The cultural dysfunction ran deeper. In July 2025, Pang Chen—the top AI researcher Apple had poached to lead its foundation models program from Google—left for Meta. He wanted to publicly share the team's research with the academic community. Apple denied it. The message was clear: Apple's AI program had lost momentum, and even its best people sensed a dead end.

What happened? While OpenAI and Google aggressively built AI infrastructure between 2020 and 2023, Apple's AI budget remained conservative. When ChatGPT exploded in late 2022, Apple was still hedging its bets. By the time the company got serious with "Apple Intelligence" in WWDC 2023, it was years behind.

But there's another reason Apple's homegrown AI stumbled: privacy. Apple's entire strategy revolved around processing as much as possible on-device, without streaming user data to servers. This stance is ethically admirable but strategically constraining. To train competitive large language models, you need massive datasets. Apple's refusal to bulk-collect user data meant it couldn't leverage the kind of signal OpenAI and Google possessed. Apple built a cage with privacy as both the lock and key.

By January 2026, Apple had a choice: keep delaying Siri or find a partner. The company chose pragmatism.

Google's Existential Crisis: The Search Engine Faces Obsolescence

Now flip the lens. Apple didn't need this deal because it faced any iPhone sales crisis. iPhone sales are stable. Consumers don't yet choose phones based on AI features. Siri isn't a profit center.

Google needed this deal because it faced an existential threat.

For nearly three decades, Google's entire business model has rested on one insight: people search for things on Google.com, and Google makes money by inserting ads into those results. It's generated hundreds of billions in revenue. But AI models like ChatGPT have changed the equation.

Today, millions of people ask ChatGPT a question and get an answer directly. No Google search. No ads. No revenue.

This is Google's nightmare scenario. As AI models become better at answering questions—whether through ChatGPT, Claude, or other systems—traditional search becomes a commodity or obsolete. Google's entire empire is built on search being necessary. If it becomes optional, the company loses its stranglehold on digital discovery and advertising.

By embedding Gemini directly into Siri on 1.5 billion iPhones, Google didn't just help Apple catch up in AI. It secured its own future. Every time someone uses Siri on their iPhone, they're now using Google's AI. More importantly, Google becomes the default discovery mechanism for AI-powered answers in a post-search world.

This is why Google's stock surged when the deal was announced. Analysts understood immediately: Google had just locked in its relevance for the next decade. The company had found a way to be indispensable in the AI era, even as traditional search fades.

Why OpenAI and Anthropic Weren't Viable

You might ask: why didn't Apple choose OpenAI or Anthropic instead? Both have groundbreaking models. Both have impressive engineering talent. But both face a critical problem Apple couldn't ignore: infrastructure at scale.

OpenAI's Financing Gamble: OpenAI faces a brutal math problem. Building the infrastructure to serve millions of users simultaneously costs roughly $792 billion through 2030. The company's current revenue? Around $20 billion annually. Even with Microsoft's billions, OpenAI's infrastructure rollout is behind schedule. By late 2025, only a fraction of the promised capacity was live. Could Apple bet its September 2026 Siri launch on an infrastructure partner still learning to scale?

Anthropic's Year of Crisis: It's worse for Anthropic. For over a year—throughout 2024 and into 2025—the company experienced catastrophic infrastructure failures. Users paying premium prices hit rate limits. The system was unreliable. In January 2026, at the exact moment Apple finalized its partnership with Google, Anthropic hired a seasoned infrastructure veteran as VP of Engineering. Translation: the company was admitting it couldn't solve this alone.

Neither company had proven they could reliably serve billions of users. Google had. Google had been handling over 90% of global search traffic for years. Its infrastructure is battle-tested at Apple's scale.

When it comes to infrastructure, proven excellence beats theoretical capability. OpenAI and Anthropic have better models (arguably). Google has better operational competence. For Apple, that was the deciding factor.

The New Revenue Model: Google's Bet on the AI-Powered Future

Here's where the deal gets interesting. Apple and Google aren't just dividing labor—they're inventing a new revenue model in the process.

In the next few years, expect to see "Sponsored Segments" appear in Siri responses. Imagine asking Siri, "What's the best coffee maker?" Instead of web results, Siri provides a direct answer—but flags that the recommendation came from a partner. Companies bid to own those spots. This isn't keyword advertising. It's intent ownership.

Google's ecosystem—its e-commerce presence, its advertiser relationships, its algorithm for matching intent to opportunity—gives it unmatched leverage in this new world. By being embedded in Siri, Google doesn't just reach users. It becomes the arbiter of which answers users trust.

That's worth far more than any search result.

The Hybrid Strategy: Apple's Quiet Admission

Finally, it's important to understand what's not being said: Apple's foundation models aren't disappearing.

Apple Intelligence will continue to run simple, privacy-critical tasks locally: text summarization, image recognition, device control, on-device personalization. This is where Apple's custom silicon excels and where privacy demands are highest. Apple's 3-billion-parameter foundation models, heavily quantized to fit on iPhone, will continue powering these features.

But Gemini will handle the heavy lifting: conversational understanding, web integration, complex reasoning, multimodal tasks. Gemini's trillion-parameter scale gives Siri something Apple's tiny models simply can't match.

It's a pragmatic hybrid. Apple didn't surrender on-device processing. It surrendered the illusion that privacy required total self-sufficiency. In doing so, Apple made a more honest privacy promise: keep sensitive tasks local, partner for capability.

The Deeper Implication

When you strip away the corporate PR, this deal reveals something uncomfortable about the future of tech: mutual handcuffing is the new strategy.

Apple needed Google to save Siri from embarrassment and maintain user expectations. Google needed Apple to lock in search dominance before AI disintermediated it. Neither company wanted this dynamic, but both accepted it as the cost of competing in the AI era.

For Apple, the lesson is harsh: perfectionism and privacy can't substitute for speed and scale. By the time Apple was ready to build world-class AI, the window had closed.

For Google, the lesson is more existential: dominance in one era doesn't guarantee survival in the next. Even a company controlling 90% of search had to partner with its closest competitor to secure its own future.

The real winner here? The 1.5 billion iPhone users who will finally get a Siri that doesn't embarrass them.

The real loser? Any company that thought they could dominate the AI era without proving they could scale reliably, move fast, and integrate deeply into the world's most valuable platforms.