Mark Gurman, reporting breaking news for Bloomberg past midnight Eastern time:

Apple Inc. is in talks to build Google’s Gemini artificial intelligence engine into the iPhone, according to people familiar with the situation, setting the stage for a blockbuster agreement that would shake up the AI industry.

The two companies are in active negotiations to let Apple license Gemini, Google’s set of generative AI models, to power some new features coming to the iPhone software this year, said the people, who asked not to be identified because the deliberations are private. Apple also recently held discussions with OpenAI and has considered using its model, according to the people.

I’m not entirely surprised by this news, knowing Apple’s years-long default search engine deal with Google, which has attracted regulatory scrutiny. I’d imagine the integration would look like something like how the default Google search engine works on iOS today. If someone asks a question to an AI chatbot via Spotlight or some other app — perhaps even Safari, in the Smart Search field, along with search results from Google — it would be redirected to Gemini, which would possibly generate the answer on-device using Google Search for in-line links to the web.

Google DeepMind has open-sourced a simplified model behind Gemini, called Gemma, and Apple could potentially strike a deal with Google to gain access to that model and integrate it into iOS and macOS, running it on the device rather than sending queries to Google’s servers. Aside from adding AI integrations into system apps, like Pages and Keynote, akin to Microsoft, I think the big opportunity is to leverage the already mighty search deal between the two companies, adding in-line Search Generative Experience-like answers in the website and search query suggestions. Safari already recommends websites, called Top Hits, so why not add a small AI-generated blurb before search results? I think it makes perfect sense — and Google is a great partner for this.

This potential deal does give way to two concerns, however: regulators and Apple’s own AI efforts. Regulators have already expressed concern about Google and Apple’s search deal potentially stifling competition in the search engine market — which I strongly disagree with, but that’s a different story — and this could potentially add fuel to the fire. Perhaps, if the courts don’t strike the search engine deal down in the coming months, the two companies could add new benefits to the contract including AI models and blurbs so that they wouldn’t have to write an entirely new contract just for the AI stuff? I find that likely.

The concern about Apple’s own AI efforts, though, is potentially more warranted. Apple is already falling behind in the generative artificial intelligence race, and we’ve been expecting/anticipating Apple to finally come out with a model of its own called Ajax come the Worldwide Developers Conference, presumably in June. Gurman says in a post on the social media website X that the deal and the potential integrations that may come with it would supplement, not supplant Apple’s own efforts, saying that some experiences will still be powered by Apple’s large language model, Ajax. However, this effectively means that we won’t be seeing an Ajax-powered Siri, even if Siri will now provide LLM-generated responses from search results because I don’t think Google would be particularly happy with helping Apple build a competitor to Assistant with Bard, debuted alongside the Pixel 8 Pro last year.

I’m also unsure, aside from Safari or perhaps Spotlight, how Gemini would be used, and where Ajax would take over. Perhaps Gemini will be used for more web-dependent queries, whereas Ajax will instead serve as the new underlying architecture for what Apple currently calls “on-device machine learning?” I think that’s possible — Ajax would handle more lightweight tasks like recommendations or Siri Suggestions, for example, especially tasks that require access to sensitive on-the-fly user data, like Photos recommendations. I think the tie-in could be good.

Though the deal with Google operationally makes sense, I would’ve liked to see a deal with OpenAI instead, since I find the generative pre-trained transformer line of models from OpenAI to be more reliable and accurate, especially with complicated, precise data. Though DeepMind’s Gemini is quicker and is less reluctant to link out to the web — which is why I use it almost exclusively for web-related queries — I would’ve liked integrations with the latest version of OpenAI’s generative pre-trained transformer model, GPT-4, into iOS 18 better since OpenAI and Apple are culturally and design-wise quite similar, in my opinion. Both companies care about the user experience, unlike Google, which has no reluctance to kill services whenever it pleases.

I do think that OpenAI would be less inclined to strike a deal with Apple, however, since Microsoft is also involved through and through with the company’s balance sheets, but who knows — I can still hold out hope. I’m unsure if any deals will be signed before WWDC, but here’s hoping.