Alphabet Skips AI Partnership Questions, Signaling Uncertainty

Article Summary

Alphabet’s reluctance to discuss its Apple AI partnership during Wednesday’s earnings call is drawing scrutiny. The tech giant sidestepped a direct question regarding how this collaboration, involving powering AI for Siri, will impact Google’s increasingly AI-focused business. The longstanding Google-Apple search partnership—worth $20 billion for Apple to be the default search engine—demonstrates a mutually beneficial relationship. Google gained access to Apple’s massive user base of 2.5 billion active devices, while Apple benefited from Google’s search dominance. The new Apple AI deal, rumored to cost $1 billion annually, isn’t as immediately clear-cut in its potential payoff for Google, particularly as its experimental 'Ads in AI Mode' are currently positioned as tests, appearing below or integrated into chatbot responses. Google is also exploring 'agentic shopping' through AI Mode, aiming for seamless checkout experiences. Meanwhile, competitor Anthropic is aggressively pursuing ad-supported AI with its upcoming Super Bowl ad. The lack of discussion from Alphabet executives—with both Pichai and Schindler repeating similar wording—indicates a cautious approach and an unresolved strategy regarding this significant new venture.

Key Points

• Alphabet executives avoided answering questions about the strategic implications of its Apple AI partnership.
• The existing Google-Apple search partnership, despite its value, doesn't clearly translate to a defined return for Google in the new AI landscape.
• Google’s experimentation with ‘Ads in AI Mode’ and ‘agentic shopping’ highlights a cautious approach to integrating AI into its core business.