Apple, $AAPL, is in talks to build Google's, $GOOGL, Gemini artificial intelligence engine into the iPhone

Apple is reportedly considering an artificial intelligence upgrade for its next batch of iPhones, potentially through a partnership with Google. Bloomberg revealed on Monday that Apple is in discussions with Google to integrate Google's Gemini AI engine into iPhones. However, neither Apple nor Google has confirmed the deal, and they did not respond to requests for comment on Monday.

Wall Street analysts see potential benefits for both companies if the deal goes through. Melius Research analysts noted in an investor note that Apple could receive payment from Google for the privilege, particularly if it helps Google increase its search revenue. For Google, such a deal would be a reputational win, especially after facing challenges in launching reliable AI products compared to competitors like Microsoft and OpenAI.

However, discussions with Google do not guarantee a deal, as Apple has also explored using Microsoft's OpenAI service. Google and Microsoft are in a competitive race to dominate the generative AI market, which gained prominence in 2023 with the introduction of OpenAI's ChatGPT. This technology has significantly impacted various industries, prompting concerns from lawmakers and tech companies about AI's evolving influence on society.

An Apple-Google partnership could be instrumental in gaining an edge in the AI market. Analysts suggest that Apple's discussions with Google are aimed at enhancing its upcoming iOS 18, ahead of a new products event scheduled for June. If the deal is finalized, Apple could access Google's Gemini AI app, potentially improving Siri, enhancing the App Store for AI developers, and enabling edge processing on its devices for faster, more secure experiences.