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Google-Apple AI deal: Threat to Microsoft’s dominance? | 2024

As Microsoft seeks to expand its significant advantage in AI, a prospective agreement to implant Google’s genAI program in iPhones might jeopardize its objectives.

Microsoft currently leads the world in AI. It’s the world’s most valuable firm, worth more than $3.2 trillion. Its meteoric development was spurred by an investment relationship with OpenAI, the firm behind the hugely popular generative AI (genAI) chatbot ChatGPT. OpenAI’s GPT big language model also serves as the foundation for Microsoft Copilot, the genAI tool that Microsoft is incorporating into nearly all of its products, including GitHub, Windows, Microsoft 365, and more.

Microsoft’s artificial intelligence dominance appears unassailable. However, technology evolves swiftly. Google and Apple are in talks to integrate Google’s GenAI tool Gemini into iPhones – a collaboration that, if completed, may replace Microsoft sooner than you think.

At the same time, Microsoft is pushing quickly to expand its AI lead, hiring the top AI minds in the business, racing to release improved versions of Copilot, and beginning to commercialize it.

Will Google and Apple dethrone Microsoft, or will it remain dominating in AI for the foreseeable future? Let’s take a look at the prospective Apple-Google megadeal, Microsoft’s latest initiatives, and the biggest wild card of all: the use of antitrust law by the US (and European) governments to take on the digital behemoths.

The Google-Apple AI deal

Google and Apple are currently in talks to introduce Google’s genAI tool Gemini to the iPhone by the end of this year, potentially paving the way for a groundbreaking agreement that could revolutionize the AI industry, as revealed by the Bloomberg article that first reported the development.

If anything, that is an understatement. Google and other device makers have already integrated Gemini into their Android phones. Should Google extend its reach to iPhones, it could wield a near monopoly on mobile AI, leaving Microsoft and OpenAI in its wake. As reported by The New York Times, this move could swiftly shift the balance, propelling Google ahead in consumer adoption of its AI, potentially outpacing even its primary competitor, OpenAI, the creator of ChatGPT.

The arrangement would prolong a longtime partnership between Apple and Google. Google already pays Apple $18 billion every year to use its search engine as the default on Apple products.

The agreement would do more than just put Gemini in the hands of billions of people around the world, surpassing Microsoft and OpenAI’s user bases. It would also allow Google to rapidly increase the power of Gemini. A genAI tool is only as good as the amount and quality of data on which it is trained, and training is a continuous process that constantly enhances the tool’s power and efficacy. With billions of people using Gemini every day, Google will most certainly be able to enhance it faster than ChatGPT and Copilot can.

If all of this happens, Microsoft may find itself in a repeat scenario. With Windows, Microsoft held a global near-monopoly on operating systems for decades. It also released a mobile operating system, Pocket PC 2000, seven years before Apple launched the iPhone. It looked like its operating system monopoly would remain indefinitely.

However, iOS (and iPhone hardware) outperformed everything Microsoft did in the mobile space, and Android was also superior. Microsoft’s OS dominance faded as cellphones grabbed the globe by storm. The same thing may happen with AI if the Google-Apple agreement goes through: Gemini would outperform ChatGPT and Copilot thanks to mobile.

Google-Apple AI deal: Threat to Microsoft's dominance? | 2024

How Microsoft Could Maintain Its AI Leadership

Even if the merger goes through, Microsoft may still dominate AI. It has a significant advantage in AI, and it does not take anything for granted. OpenAI has been rapidly releasing new, more powerful versions of GPT; version 4 was released in 2023, and it appears that a “materially better” version 5 will be available this summer. As a result, ChatGPT and Copilot are constantly improving their performance.

In addition, Microsoft recently hired Mustafa Suleyman, a co-founder of DeepMind, which was acquired by Google in 2014 and then renamed Gemini. After selling DeepMind, Suleyman launched Inflection AI, and Microsoft has hired practically the entire AI personnel of Inflection, including chief scientist Karén Simonyan. Microsoft now employs the world’s greatest AI talent, either directly or through OpenAI.

Microsoft has also been working to monetize artificial intelligence. Copilot is now integrated into the company’s whole product line and available as a fee-based add-on. Microsoft can put that money back into research.

Of all, there is no guarantee that Google and Apple will reach an agreement. Even if they do, it remains unclear how well it will function.

A Key Variable: The Role of Government Regulation in AI

The US government, rather than tech businesses, may eventually decide who comes out on top. Google and Apple are both fighting big federal antitrust litigation, so it’s not surprise that their AI deal will be scrutinized as well. The government could try to derail a contract before it is even signed.

At the same time, Microsoft faces its own antitrust AI issues. The FTC is claimed to be looking into Microsoft’s tight relationship with OpenAI for potential antitrust violations, which means the company might lose its key rationale for having an AI lead: its partnership with OpenAI.

All three businesses are facing antitrust probes and lawsuits in both the EU and the United Kingdom.

The outcome of these lawsuits and probes may well determine which business will dominate AI in the future. I wouldn’t gamble on this one because there is so much uncertainty, including probable federal intervention. But we do know one thing: it’s going to be a wild trip, and not even ChatGPT, Copilot, or Gemini can anticipate the end result.

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