The Google-Apple search deal judgment: Should genAI firms worry?

Forgive me for going off the wall a little today, but what’s interesting about the judgment made concerning the Google-Apple search deal isn’t that not much will change, it’s that it suggests that exclusive deals between generative AI firms and Big Tech will not be permitted. That’s going to spell interesting times ahead, as the genAI firms will not be able to use exclusivity as a way to achieve market dominance.

The decision also suggests that Apple’s approach to AI is completely appropriate. As I understand it, Apple’s approach means the company focuses its efforts on a relatively limited set of Apple Intelligence capabilities while opening the door to third-party genAI services for the rest. That more open approach enables competition in the AI provision space.

Which is good.

What’s unique about AI?

The Google judgment also shows how the courts are thinking, confirming that were Apple to go full steam ahead with its own unique mass market service tied exclusively to its products, it could face even more problems in the courts than it does already. 

With that in mind, it makes sense for Apple to offer a limited sequence of home-baked genAI services, while remaining open to solutions from beyond the company. It has to do this because it is a platform provider, and if Google can’t make exclusive genAI deals for Gemini, neither can Apple, or anyone else. 

At least that’s how I see it.

If that is the case, then any platform-specific exclusivity around the provision of genAI services will eventually be tested by the courts, and the decisions taken in the Google-Apple case can easily be seen as a template for the judgment those courts will reach.

That means, of course, that the future for tech platforms cannot be built on the basis of exclusive arrangements with genAI firms. It also means those firms will need to compete for space on those platforms, which likely means many genAI providers will need to accept a future as service providers, expected to compete in more or less the same way as barber shops or podiatrists — they won’t be exclusive, and anyone on any platform will be able to choose to use whichever service they like.

That’s in the consumer realm, at least.

When services get boring

The scenario for enterprise deployments may differ, but in that space AI providers have little choice but to differentiate themselves through specialized service provision, reflecting the unique needs of different enterprise market sectors, including sovereign cloud offers. All the same, the inference remains one in which genAI, while important, becomes a service — and once that happens, it will inevitably evolve into a commodity. 

As a commodity, the cost of access to these services can only fall, posing economic challenges to providers forced to invest in processors and energy to handle the growing number of requests. What happens next, history shows, is the collapse of some providers and the emergence of a small number of names who must themselves avoid becoming visible monopolies in that space, even as they grapple with the also inevitable emergence of ever-tightening regulation around data protection, usage, and so on.

The only way out for any of these providers might be to seek out ways to develop unique market offerings you can’t get elsewhere. Consolidation is inevitable.

(Investors in the space should consider this when risking capital. The company you want to bet on is the one led by people already seeking to carve out a unique market position beyond the AI service they provide.)

Follow the money

Another thing that’s worth considering is that data is a finite quantity. Once you consume all the world’s information so you can build AI models, there will be no other data left to use, which means that eventually all AI will be the same. Once it is the same, then what difference does the brand name make?

Those who can’t build themselves up with unique identities will fall, and given the damage AI is likely to do to employment, those at the top of the industry tree today must expect consumer users to abandon them in disgust in favor of more ethical AI providers tomorrow.

Perhaps that’s an opportunity Apple will explore?

There is an irony here, also, because as a result of the Google-Apple judgment it is becoming clear that while AI is likely to replace almost everyone, it will also inevitably replace itself, ushering in a witless global conformity few of us would choose and leaving the investor classes just as futile as everyone else — at least, until whatever other Next Big Thing comes to disrupt what’s left of our world.

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