Apple Investment in OpenAI Could Threaten Google Search Dominance

Apple’s search deal with Google reportedly could be impacted by a potential Apple investment in OpenAI.

Under a current deal between the two companies, Google pays Apple to be the default search engine on iOS devices, according to a Friday (Aug. 30) report by Seeking Alpha.

This longstanding agreement adds billions of dollars and several percentage points of Apple’s operating margin and profits, PYMNTS reported Aug. 6. Apple and Google entered into this Internet Services Agreement in 2016 and, per the deal, Google pays Apple a share of its search ads revenue in exchange for Apple preloading Google as the “exclusive, out-of-box default” search engine. The agreement is in place through 2026, and there’s an option to extend the joint efforts until 2031, via mutual agreement.

“A large direct investment by Apple into OpenAI could raise concerns on potential AI partnership as a long-term alternative to Google search,” Bank of America analysts wrote, according to the Seeking Alpha report. “At the very least, a capital infusion should help OpenAI compete vs. Google and Amazon.”

Apple’s potential investment in OpenAI was reported Thursday (Aug. 29). Apple is among the companies that are in talks to invest in a new funding round by OpenAI, in which the artificial intelligence (AI) company aims to raise several billion dollars, reports said, citing unnamed sources.

OpenAI became the first official partner of Apple Intelligence — a new suite of AI features that will be added to the iPhone, Mac and iPad experience — in June. Later this year, OpenAI’s GPT-4o will be integrated into Apple’s iOS, macOS and iPadOS and, with the user’s permission, will step in to handle tasks that Apple’s Siri can’t manage.

OpenAI said in July that it is testing a prototype of new AI search features that may be integrated into its chatbot, ChatGPT. The company launched the prototype, dubbed SearchGPT, to a small group of users and publishers, and plans to integrate its best features into ChatGPT after receiving their feedback.

When announcing the launch, OpenAI said the prototype is “designed to combine the strength of our AI models with information from the web to give you fast and timely answers with clear and relevant sources.”