Apple’s shift to AI is poised to soften blow from Google ruling

Mark Gurman | Bloomberg News (TNS)

Google’s defeat in an antitrust suit filed by the Justice Department has cast a shadow over partner Apple Inc., which generates roughly $20 billion a year in payments from the internet search giant.

Apple shares slipped almost 5% on Monday after a judge ruled that Google’s payments to device makers — made in return for its search engine getting preferential placement — were illegal. The decision handed a win to the Justice Department in its first major antitrust case against Big Tech in more than two decades.

For Apple, the move jeopardizes a revenue stream that has helped bolster sales in recent years. But the iPhone maker has already been moving away from its dependence on traditional internet searches. With Apple revamping its Siri digital assistant to handle queries more deftly — and integrating AI chatbots into its software — it’s betting that AI technology will eventually take over.

That underlines the government’s struggle with the technology industry: It moves so quickly that by the time a serious reckoning comes, the industry is already restructuring itself around the next innovation.

Apple is weaving OpenAI’s ChatGPT capabilities into its software and expects to do the same with Google’s Gemini chatbot. Over time, the company could steer consumers toward AI and Siri instead of the web browser.

That would give Apple the opportunity to reach new, nonexclusive agreements with AI providers — including Google — that don’t run afoul of the U.S. government. Still, it will likely take many years for Apple to make serious money from AI.

For Google, the decision is a bit of a mixed blessing, given the hefty amounts that it’s paid Apple to make its search engine the default option.

“In the short term, it actually could save them a lot of money,” said Ari Paparo, an advertising entrepreneur who used to work at Google.