Apple Strikes $1 Billion Annual Deal with Google to Power Next-Generation Siri with Custom Gemini AI

Reviewed byNidhi Govil

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Apple is reportedly finalizing a $1 billion annual agreement with Google to use a custom version of Gemini AI for its overhauled Siri assistant. The partnership represents a significant shift in Apple's AI strategy as it seeks to catch up in the artificial intelligence race.

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Apple's Billion-Dollar AI Partnership

Apple is nearing a landmark agreement with Google that would see the iPhone maker pay approximately $1 billion annually for access to a custom version of Google's Gemini AI model to power its next-generation Siri assistant

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. This represents a significant strategic shift for Apple, which has traditionally relied on proprietary technology but is now seeking external AI capabilities to remain competitive in the rapidly evolving artificial intelligence landscape.

The custom Gemini model would feature an impressive 1.2 trillion parameters, making it roughly eight times more complex than Apple's current cloud-based Apple Intelligence system, which operates with 150 billion parameters

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. This substantial increase in computational complexity would enable more sophisticated natural language processing and reasoning capabilities for Siri users.

Competitive Evaluation Process

Apple's decision to partner with Google came after an extensive evaluation process that included testing AI models from multiple providers. The company considered offerings from OpenAI and Anthropic before ultimately selecting Google's solution

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. According to reports, Google offered a more favorable financial arrangement compared to Anthropic, which would have cost Apple approximately $1.5 billion annually

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Technical Implementation Strategy

The partnership will utilize a hybrid approach to AI processing. Apple's custom Gemini model will operate on the company's Private Cloud Compute servers, handling more complex computational tasks, while Apple's proprietary models will continue running on-device for personal data processing

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. This architecture maintains Apple's commitment to user privacy while leveraging Google's advanced AI capabilities for enhanced functionality.

Apple CEO Tim Cook recently confirmed that the company is making good progress on the AI-powered Siri overhaul, with the enhanced assistant expected to launch in spring 2025

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. The company has been building out its Private Cloud Compute infrastructure, with a new manufacturing facility in Houston recently beginning production of servers specifically designed for Apple Intelligence

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Broader AI Strategy and Future Plans

During Apple's Q4 2025 earnings call, Cook emphasized the company's multi-pronged approach to AI development, which includes in-house foundation models, third-party partnerships, and potential acquisitions

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. The CEO stated that Apple remains "open to pursuing M&A if we think that it will advance our roadmap," indicating the company's willingness to make strategic investments in AI capabilities.

Cook also revealed plans for additional AI integrations beyond the existing ChatGPT partnership, telling CNBC that "our intention is to integrate with more people over time"

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. This suggests Apple is positioning itself as a platform for multiple AI services rather than relying solely on proprietary technology.

Market Context and Implications

The Google partnership represents Apple's acknowledgment that it has fallen behind in the AI race compared to competitors like Microsoft, Google, and OpenAI

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. The company's slower adoption of generative AI technologies has prompted this strategic pivot toward external partnerships while it continues developing competitive in-house capabilities.

This arrangement builds upon Apple's existing financial relationship with Google, which already pays Apple approximately $20 billion annually to remain the default search engine on Apple devices

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. The search partnership has been scrutinized by regulators, with the Department of Justice citing it as evidence of Google's monopolistic practices.

Reports indicate that Apple will not prominently feature Google's involvement in its marketing materials, maintaining the appearance of proprietary AI capabilities while leveraging external technology

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. The partnership is intended as a temporary solution until Apple's own AI models become sufficiently advanced to replace third-party dependencies.

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