⚖️Apple $1B Deal to Use Gemini

In partnership with

Apple's Admission and the Cost of Catching Up

Apple is reportedly nearing a landmark deal to pay Google approximately $1 billion annually for a custom, licensed version of Google’s Gemini AI model to overhaul Siri. This move is a stunning strategic pivot for Apple, a company fiercely committed to developing proprietary, in-house technology. The core motivation is the staggering difference in capability: Google’s model, with an estimated 1.2 trillion parameters, is roughly eight times more complex than Apple's current cloud-based AI. Facing a major deficit in the Generative AI race against rivals like Google, OpenAI, and Anthropic, Apple is essentially buying a temporary, world-class solution to power Siri's next-generation summarization and planning functions, expected to launch in Spring 2026. Crucially, to protect its brand and privacy stance, Apple will run the custom Gemini model on its own Private Cloud Compute (PCC) servers, ensuring user data never touches Google’s infrastructure—a critical architectural detail meant to mitigate the political and privacy risks inherent in this major collaboration.

The Commoditization of Foundation Models and Antitrust Risk

This billion-dollar transaction sends two critical signals to startup founders. First, it validates the business model of licensing large, high-quality foundation models (FMs). When even the world's most valuable company cannot afford the time and technical risk to build its own competitive model fast enough, the market for "AI-as-a-Supplier" explodes. This opens massive opportunities for smaller, highly specialized AI labs—including those focusing on model distillation, fine-tuning, or specific domain FMs—to secure lucrative licensing deals with large enterprises. Second, this deal massively escalates the antitrust scrutiny on Big Tech. The Justice Department is already challenging Google's dominance in search, which relies on a separate $20 billion annual payment from Apple to be the default search engine. Adding a $1 billion AI licensing deal further entrenches the two giants, creating a potential "mobile AI monopoly" by covering Google's Pixel/Android, Samsung's Galaxy AI (which already uses Gemini), and now Apple's iPhone. Founders should recognize that this level of market concentration makes the regulatory climate for any future large acquisition or partnership increasingly hostile.

Startup Impact

The Apple/Google deal dramatically accelerates the demand for application-layer startups that integrate deeply with the new, powerful Siri. It also raises the legal bar for data handling. Practical Advice for Founders:

• Prioritize App Intents: Siri's enhanced "planner" and "summarizer" will rely heavily on App Intents—Apple’s framework for exposing app actions and data to the voice assistant. Any startup with an iOS application must aggressively integrate and optimize their App Intents now. A truly "smart" Siri will prioritize apps that offer seamless, multi-step task execution, making deep integration a prerequisite for future visibility and growth.

• Decouple Infrastructure and IP: For AI startups, this is a clear warning to legally and technically separate the model IP (the weights/code) from the model infrastructure (the servers/data). Apple is paying for the IP and running it on its own servers. If your startup is developing a model, ensure your commercial agreements allow for this decoupling, as it is key to attracting major, privacy-conscious enterprise customers.

• Hedge Against Vendor Lock-In: While Apple is starting with Gemini, its long-term strategy is to replace it with its own model, proving even the largest companies view these deals as a temporary bridge. Founders should choose cloud and model providers whose APIs and architectures offer clear, manageable exit strategies. Avoid deep, proprietary dependencies that will make a switch to a competing model (or Apple’s future in-house solution) prohibitively expensive.

In addition to our newsletter we offer 60+ free legal templates for companies in the UK, Canada and the US. These include employment contracts, investment agreements and more