Advertisement
Canada markets close in 39 minutes
  • S&P/TSX

    22,979.32
    +227.64 (+1.00%)
     
  • S&P 500

    5,659.98
    +28.76 (+0.51%)
     
  • DOW

    40,935.85
    +724.13 (+1.80%)
     
  • CAD/USD

    0.7314
    +0.0004 (+0.05%)
     
  • CRUDE OIL

    80.86
    -1.05 (-1.28%)
     
  • Bitcoin CAD

    88,748.48
    +1,758.07 (+2.02%)
     
  • CMC Crypto 200

    1,346.16
    +5.19 (+0.39%)
     
  • GOLD FUTURES

    2,470.80
    +41.90 (+1.73%)
     
  • RUSSELL 2000

    2,258.62
    +71.60 (+3.27%)
     
  • 10-Yr Bond

    4.1670
    -0.0620 (-1.47%)
     
  • NASDAQ

    18,480.79
    +8.22 (+0.04%)
     
  • VOLATILITY

    13.17
    +0.05 (+0.38%)
     
  • FTSE

    8,164.90
    -18.06 (-0.22%)
     
  • NIKKEI 225

    41,275.08
    +84.40 (+0.20%)
     
  • CAD/EUR

    0.6708
    +0.0003 (+0.04%)
     

What Apple's OpenAI deal means for Google: Morning Brief

This is The Takeaway from today's Morning Brief, which you can sign up to receive in your inbox every morning along with:

  • The chart of the day

  • What we're watching

  • What we're reading

  • Economic data releases and earnings

Now that Cupertino has unveiled its AI plans, the relationship between frenemies Apple and Google just got more complicated.

That’s because the sometimes-gadget rivals work as partners when it comes to search and online advertising. But the tie-up, which has featured heavily in a landmark antitrust lawsuit against Google’s dominance in the search engine market, will come under new strain as AI changes how people seek out information online.

ADVERTISEMENT

For more than two decades, Apple has fixed Google as the default search engine in its Safari browser. Apple steers the traffic of its huge user base into Google’s search business. And in exchange for the default privilege, Google pays the iPhone maker around $18 billion a year.

But Apple, to the delight of investors, has another deal going. Enter Sam Altman.

Apple is partnering with OpenAI to bring ChatGPT to the iPhone. It’s part of a bold effort to catch up to Big Tech rivals that have gone all-in on AI. Later this year, iPhone users will get free access to the chatbot, which will mesh with Siri and other apps, giving people access to a repository of knowledge and granting OpenAI a ticket to mainstreaming AI technology.

Apple's iPhones infused with increasingly capable versions of ChatGPT would lessen the need to use Google search. If users in significant numbers start interacting with the web primarily through Siri instead of a search bar, even the heavy influence of default status might mean very little for the future of search traffic.

Apple’s alliance with OpenAI comes at a pivotal moment for Google’s own AI ventures.

The search giant recently released its new feature, AI Overviews, which gives users pithy answers to their search queries without having to click around the web. But Overviews, along with a previous image generation tool, was met with near-instant criticism as users discovered the AI features were churning out absurd or incorrect information.

The troubled debuts shaped a pattern of bungled releases. They’ve fed a narrative that Google’s rush to plant its AI flag reflected mismanagement and strategic weakness. Deeper issues are also at play.

If chatbots and other software powered by large language models (LLMs) are as transformational as tech executives claim they are, the business of search is poised for major disruption.

Every new deal OpenAI inks with media and technology companies can be seen as an attempt to strengthen an alternative to search, siphoning attention away from Google’s empire.

Apple can still team up with Google, of course, perhaps eventually pulling in Gemini, Google’s set of generative AI models, even as it continues to develop in-house AI technology.

Apple’s OpenAI collaboration doesn’t eclipse its long union with Google. But it adds a wrinkle to the relationship. In this early stage of a new tech paradigm, a fresh set of defaults is up for grabs.

morning brief image
morning brief image

Hamza Shaban is a reporter for Yahoo Finance covering markets and the economy. Follow Hamza on Twitter @hshaban.

Click here for the latest technology news that will impact the stock market.

Read the latest financial and business news from Yahoo Finance