📋 Table of Contents
Jump to any section (19 sections available)
📹 Watch the Complete Video Tutorial
📺 Title: Why Apple Just Gave Up on AI
⏱️ Duration: 789
👤 Channel: ColdFusion
🎯 Topic: Why Apple Just
💡 This comprehensive article is based on the tutorial above. Watch the video for visual demonstrations and detailed explanations.
Apple, long revered for its innovation and control over hardware and software, is facing an unprecedented crisis in artificial intelligence. Once confident in its ability to lead, the company now finds itself scrambling to catch up—so much so that it’s turning to its longtime rival, Google, for help. In a stunning reversal, Apple is reportedly paying $1 billion per year to license a custom version of Google’s Gemini AI model to power Siri. This move signals a rare admission of failure and raises profound questions about the value of building AI from scratch in today’s tech landscape.
This comprehensive guide unpacks everything revealed in the transcript: the timeline of Apple’s AI collapse, the shocking internal dysfunction, consumer attitudes toward mobile AI, the strategic implications of licensing vs. building, and what this means for Apple’s future—and yours.
Apple’s Public Confidence vs. Private Reality
In December 2023, Apple executives Johnny Shroudy and John Turners dismissed concerns about falling behind in AI, stating, “Not too worried.” They projected confidence that Apple was on track. But by early 2025, that facade had crumbled.
Robbie Walker, Apple’s senior director, privately called the delays of “Apple Intelligence” “ugly and embarrassing” during an internal meeting. He labeled the decision to publicly promote unfinished AI features as an “absolute disaster.” Despite being advertised as the flagship innovation of the iPhone 16—released over a year ago—most promised AI capabilities never reached users.
The $1 Billion Lifeline: Apple Turns to Google
According to a Bloomberg report, Apple is finalizing a deal to pay Google $1 billion annually to use a custom version of the Gemini large language model (LLM) to power Siri. This marks a dramatic shift for a company that prides itself on vertical integration and in-house innovation.
Technical and Privacy Safeguards
To align with Apple’s privacy-first branding, the custom Gemini model will run on Apple-controlled private cloud infrastructure, not Google’s public servers. As Bloomberg notes:
“Apple believes that running the models on its own chips housed in Apple-controlled cloud servers… will better safeguard user privacy. The company has already internally tested the feasibility of the idea.”
This setup allows Apple to claim data never leaves its ecosystem—even though the underlying AI is Google’s.
How Did Apple Fall So Far Behind?
Apple’s AI struggles didn’t happen overnight. They stem from years of missteps, internal conflict, and strategic miscalculations.
Internal Team Fractures and Leadership Exodus
By mid-2025, Apple’s AI efforts were in chaos:
- The AI team split into two factions that actively worked against each other.
- The Siri team was notoriously slow—taking two years just to remove the “Hey Siri” wake phrase.
- In June 2025, Ruming Pang, head of foundational AI and leader of a 100-person LLM team, left Apple to join Meta.
- Other top AI engineers followed, accelerating the talent drain.
The ChatGPT Shockwave
When OpenAI launched ChatGPT in December 2022, Apple’s internal teams were “sent scrambling and haven’t stopped floundering ever since.” Generative AI’s unpredictable outputs clashed with Apple’s obsession with reliability and user experience.
Apple Intelligence: Vaporware and Lawsuits
In 2024, Apple announced “Apple Intelligence” and a reimagined Siri with features like:
- In-app actions triggered by screen context
- Personal data-aware responses
- On-device generative capabilities
But what users actually received was largely unchanged. Siri continued to:
- Return Google search links instead of direct answers
- Fail basic commands (e.g., playing the correct song)
- Offload tasks to third parties like ChatGPT for writing tools, image generation, and on-screen analysis
The gap between promise and delivery led to false advertising lawsuits and internal blame-shifting:
- AI engineers blamed marketing for overhyping unfinished features.
- Marketing teams claimed they were given optimistic timelines by engineering.
Siri vs. Gemini: A Real-World Showdown
The transcript highlights stark performance differences between Siri and Google’s AI:
| Task | Siri (iPhone 16 Pro Max) | Gemini (Pixel 9 Pro XL) |
|---|---|---|
| Compare iPhone 16 Pro Max vs. Pixel 9 Pro XL | Returned Google search links | Provided full breakdown of specs, similarities, and differences |
| Play the Friends theme song | Played a random song with “friends” in the title | Opened YouTube Music and played the correct track: “I’ll Be There for You” |
This demonstrates that Siri, even in 2025, functions more like a search redirector than an intelligent assistant.
Why Apple Tried—and Failed—to Go It Alone
Apple initially explored partnerships with other AI firms. Talks with Anthropic collapsed because Anthropic demanded too much money. With internal development stalled and delays mounting, Apple had no choice but to seek Google’s help.
Model Size Disparity
The scale difference between Apple’s and Google’s models is staggering:
| Company | Model Size (Parameters) | Implication |
|---|---|---|
| Apple (internal model) | ~150 billion | Limited reasoning, narrow capabilities |
| Google (custom Gemini for Apple) | ~1.2 trillion | Far more powerful, context-aware, and versatile |
Parameters are a rough indicator of an LLM’s capacity—Apple’s model is less than 1/8th the size of the one it’s licensing.
Do Consumers Even Want AI in Their Phones?
Despite the industry hype, real-world data shows limited consumer demand for mobile AI.
CNET Survey Findings (2025)
- Only 11% of U.S. smartphone users upgraded their device because of AI features—a 7% drop from the previous year.
- About 30% of users find mobile AI unhelpful and oppose adding more AI features.
Samsung’s Galaxy AI Reality Check
Samsung bet heavily on “Galaxy AI” as a driver for upgrades. Yet in subsequent earnings calls, the company cited “market weakness” and “economic uncertainty”—not AI—as key challenges. This suggests AI remains a “nice-to-have”, not a purchase driver.
Apple and Google: A Complicated, Lucrative Relationship
This isn’t the first time Apple has relied on Google—just the most ironic.
| Deal | Annual Value | Purpose |
|---|---|---|
| Google Search as iPhone default | $18 billion | Google pays Apple to be the default search engine |
| Custom Gemini for Siri | $1 billion | Apple pays Google for AI model access |
For Apple, spending $1 billion—just 5.5% of what Google pays them—to fix Siri is a financially rational move, even if it’s a blow to pride.
Marketing Strategy: Silence Is Golden
Apple is expected to be extremely quiet about its reliance on Google’s AI. There will likely be no mention of “Gemini” in promotional materials. This preserves Apple’s image as an innovator while masking its dependency.
Broader Implications: Is Building Your Own AI Worth It?
Apple’s pivot raises a fundamental question: If you can license a state-of-the-art AI model, why spend hundreds of billions building your own?
The Smartphone Analogy for AI
Think of AI infrastructure like a smartphone:
| Smartphone Component | AI Equivalent | Key Players |
|---|---|---|
| Hardware (chips, data centers) | AI compute infrastructure | NVIDIA, Microsoft, Oracle, cloud providers |
| Operating System (iOS/Android) | Foundational LLMs | OpenAI, Anthropic, Google, Meta |
| Apps (Instagram, Spotify) | AI-powered applications | Apple (Siri), Samsung (Galaxy AI), startups |
Companies like OpenAI and Google are building the “OS” of AI. Apple may have accidentally discovered that for many use cases—especially consumer-facing apps like Siri—it’s smarter to build on top of existing models rather than reinvent the wheel.
AI as a Commodity?
The transcript suggests that large language models may become a commodity—like electricity or cloud storage—where differences between providers matter less for everyday tasks. If true, the “AI arms race” could be inefficient for most companies.
Apple Isn’t Alone—Samsung Did It First
Apple isn’t pioneering this approach. Samsung’s Galaxy AI also runs on Google’s Gemini. This suggests a broader industry trend: even hardware leaders recognize the value of leveraging best-in-class AI rather than going solo.
Impact on Apple’s Business: Not as Dire as It Seems
Despite the AI embarrassment, Apple’s financial health remains strong:
- iPhone sales in China are up 29% year-over-year, driven by the iPhone 17.
- MacBook market share is growing due to efficient Apple Silicon chips, superior battery life, and user frustration with Windows 11.
Why Windows 11 Is Driving Users to Mac
The transcript cites several Windows pain points:
- Excessive telemetry and privacy concerns
- Forced Microsoft account during setup
- Disruptive, surprise updates (“like a SWAT team advance”)
- Perception that Microsoft is monetizing every surface
These issues are accelerating Mac adoption—offsetting any short-term reputational damage from the AI setback.
Apple’s Official Justification: Quality Over Speed
Apple executives have defended the delays by citing quality standards. As one leader stated:
“This just doesn’t work reliably enough to be an Apple product… We don’t want to disappoint customers… It would have been more disappointing to ship something that didn’t hit our quality standard.”
While this aligns with Apple’s brand, it also reveals a deeper truth: Apple believes current generative AI is still immature for its stringent reliability requirements.
What Features Will Gemini Power in Siri?
According to Bloomberg, the custom Gemini integration will enable:
- Series summary (e.g., summarizing email threads or messages)
- Multi-step planning (e.g., “Plan a weekend trip to Napa”)
These go beyond basic voice commands, offering true contextual intelligence—if implemented well.
The Timeline of Apple’s AI Collapse
Here’s a chronological breakdown of key events:
| Date | Event |
|---|---|
| Dec 2022 | ChatGPT launch sends Apple into panic mode |
| Dec 2023 | Apple execs claim they’re “not too worried” about AI |
| 2024 | Apple announces “Apple Intelligence” and new Siri at WWDC |
| 2024–2025 | Promised features fail to ship; users get same old Siri |
| Mar 2025 | Robbie Walker calls delays “ugly and embarrassing” |
| June 2025 | Ruming Pang (AI head) leaves for Meta |
| 2025 | New Siri delayed again—now expected Q2 2026 |
| 2025 (recent) | Apple finalizes $1B/year deal with Google for Gemini |
What This Means for the Future of AI Development
Apple’s retreat from foundational AI could signal a market correction. If even a company with unlimited cash and engineering talent can’t build a competitive LLM quickly, perhaps the field is consolidating around a few key players.
This validates a leaner strategy: focus on user experience, integration, and privacy—not raw model development. For Apple, the goal isn’t to invent the best AI, but to deliver the best AI experience.
Final Thoughts: A Humbling Moment, Not a Catastrophe
While embarrassing, Apple’s AI stumble is unlikely to derail the company. Tim Cook isn’t losing sleep over it. The iPhone remains dominant, the Mac is resurgent, and the ecosystem is stronger than ever.
But this episode serves as a cautionary tale: Even the most powerful tech giants can misjudge technological shifts. And in the AI era, speed, collaboration, and adaptability may matter more than total control.
What Do You Think?
As the transcript asks: Is AI in smartphones overhyped? Are AI assistants the only useful application? Or do you want AI woven throughout your device? Share your thoughts—this conversation is just beginning.
Key Takeaways
- Apple is paying Google $1 billion/year to power Siri with a custom Gemini model.
- Internal dysfunction, talent loss, and overpromising led to the collapse of “Apple Intelligence.”
- Most consumers don’t prioritize AI when buying phones—but they do want a functional assistant.
- Licensing AI may be smarter than building it—AI could become a commodity.
- Despite the setback, Apple’s business remains strong thanks to iPhone 17 demand and Mac growth.
Apple’s AI journey proves that in the race to innovate, sometimes the smartest move is to admit you need help—and then integrate it so seamlessly, no one notices.
