Apple in talks with OpenAI for iPhone AI features: report

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Apple (NASDAQ: AAPL) has renewed discussions with OpenAI to power its generative artificial intelligence (AI) features on the upcoming iPhone models.

The two companies started talks earlier this year, with the iPhone maker shopping for a partner to boost its AI capabilities. These discussions have intensified as the launch of the latest iPhone operating system, iOS 18, approaches, Bloomberg reports.

Like all its Big Tech peers, Apple has invested billions into AI development. Earlier this month, it teased a new AI model, dubbed ReaLM, which it says understands context better than existing models to offer a more natural conversation with iPhone users.

However, despite its best efforts, the company is lagging behind old rivals such as Google (NASDAQ: GOOGL) and Meta (NASDAQ: META) and emerging challengers like OpenAI and Anthropic.

In March, insiders revealed that the iPhone maker was in talks with Google to integrate its Gemini AI model into the next version of the iOS. The company was also exploring a deal with Anthropic, the San Francisco startup in which Amazon (NASDAQ: AMZN) and Google have collectively invested $6 billion.

Bloomberg reports that Apple has yet to settle on which tech firm it will partner with. It’s also considering signing deals with multiple AI providers to power various specialized facets. One proposal is for Apple’s generative AI technology to deliver in-device features while the third parties offer more sophisticated solutions like image and text generation.

Google has an advantage as it has a multi-year working relationship with Apple. It reportedly pays $18 billion annually to retain its status as the default search engine in Apple devices.

The partnership would be Google’s most significant victory as it fights for AI supremacy with startups like OpenAI and mainstays like Meta. It would give Google’s Gemini access to over 2.2 billion Apple devices globally.

However, it wouldn’t be Google’s first smartphone partnership. Earlier this year, Samsung announced Galaxy AI features on its Galaxy S24 smartphones, powered by Gemini.

For Apple, the partnership would be an admission that it has lost the AI race to its rivals. However, it would allow the company to avoid all the liability at a time when regulators are taking a keen look at AI.

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