Is Apple Losing the AI Race?

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Google, Amazon, Microsoft and Meta plan to spend $725 billion this year. Mostly on data centers for AI. Billion with a B. I mean they have it, but still...

Apple is not in that club. Not really. Apple now pays Google roughly a billion a year to rent a Gemini model for Siri. But that’s a different perspective. A different idea. A plan.

Some still say Apple gave up on AI. Apple is dead last, they say.

I don't think so.

Siri is the problem

We all know the story. At WWDC 2024, Apple promised a new Siri. One that sees what's on your screen, knows your messages and your calendar, and does things for you across apps. Apple sold the iPhone 16 with it. In the ads, too.

Then, in March 2025, Apple delayed those features and pulled the ads.

This year it paid for that. Apple agreed to a $250 million settlement over the Siri promises.

In January, Apple and Google made it official: the next Apple models are built on Gemini. Apple looked at OpenAI and Anthropic too, and picked Google.

By the way, Apple did something like this before. In 1996 it couldn't build a modern operating system, so it bought NeXT, Steve Jobs’ new company after he had gotten released from Apple. That NeXT software is the foundation for everything that runs on Mac and iPhone.

Access

On September 14, Siri AI arrived with iOS 27. New name, its own app, and the features from 2024. It reads your screen, searches your messages, mails and photos, and takes actions in your apps.

Is it smarter than ChatGPT, Claude or Gemini itself? No, definitely not. Those write better, reason better, code better. But they don't know anything about you. Not without you handing everything over.

And that’s the point, most people forget about "artificial intelligence": Access is the key.

For ChatGPT to do what Siri AI does on your iPhone from now on, you'd have to give OpenAI standing access to your messages, your mail, your photos, your calendar, and your screen. There’s a lot of trust involved. And people don’t really trust AI companies that much. But they trust Apple, generally speaking. Way more than other tech giants.

Apple has been building that trust reputation for years. In 2016 it refused a court order to build an unlocking tool for the FBI, in a terrorism case.

The setup under Siri AI plays into that. Apple's own smaller models run on the device. The heavier requests go to Apple's Private Cloud Compute, where the Gemini-based models run. Still more private than Gemini or ChatGPT or Claude.

Apple says personal data there is "not stored nor made accessible to Apple or anyone else." Not to Google either, as far as I understand it.

So Apple may have rented the brain. But the phone, the data and the trust stay with Apple. And that will be huge in the near future.

Because AI models will be equally good from all companies soon. So they don’t have an edge anymore. Apple does. Hardware. A loooot of it.

2.5 billion devices

Everybody else has to build the computer the AI runs on. That's the $725 billion. Data centers, chips, power.

Apple already has that. It's in your pocket. Apple has more than 2.5 billion active devices out there, every one with an Apple chip. And the customers paid for them.

Every answer from a cloud chatbot costs the chatbot company money. Compute, power, again and again. An answer on the device, after the iPhone is sold, costs Apple close to nothing.

At least for the simpler stuff. The big requests still go to the cloud, and those Siri AI features come with daily limits. So Apple pays for compute too. Just a lot less of it, I would guess. And they will eventually have their own compute power without Gemini plus their hardware and trust. That’s a 3-way punch nobody else really has.

If OpenAI wants around all that, it needs its own device. They're working on one, with Jony Ive. But it launches into a world where the iPhone, the Mac, the iPad, the Watch and the AirPods already talk to each other. That took Apple almost twenty years.

Good luck with one gadget.

And hardware will get bigger at Apple

Which brings me to John Ternus. Apple's CEO since September 1. Tim Cook moved to executive chairman.

Ternus ran iPhone hardware, then all of hardware engineering. In March he fronted the launch of the $599 MacBook Neo, the first Mac with an iPhone chip (the A18 Pro).

On the same April day Apple named him CEO, it also named Johny Srouji its first chief hardware officer. The man behind Apple's own chips since 2008.

So hardware leads the company now. Silicon, devices, the whole stack. The model is the one piece Apple rents.

For now.

Downsides?

The big one: Apple now depends on Google for a bit. For the most personal part of the iPhone. If models stop being interchangeable, and one company pulls ahead for good, Apple sits at the table of a rival.

But Apple has relied on competition before. And it turned out to be great in the end.

Siri AI is a beta. You opt in, you might land on a waitlist, and it's English only for now. More languages in October.

And it's not coming to the EU at launch. I am in Germany.

Also, Apple still has to show that Siri AI works better than Siri ever did.

The Bottom Line

Apple doesn't need the smartest model. It needs the one people let into their phone. That's quite a different race. And Apple is not dead last in that one. Oh no.

So, who would you rather give access to your messages, mails and photos? Apple, or OpenAI?

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