Today Apple launched its revamped AI offering. Judging by several reports, Apple pays Google a mere billion dollars a year to operate it. Essentially just licensing the IP. Google are (allegedly) happy to turn over the right to operate and distill their models for only a billion a year.

Consumer revenue is only a smallish share of the puzzle, but still:

If you are a consumer and you have a Mac or an iPhone, what do you need from AI that Apple's new offering won't provide? Why would you pay for ChatGPT, or even tolerate its inevitably increasingly desperate ad placements?

Assume Google will have similar tools in their phones, and Google search will continue to have the offering it does.

In short, where is the evidence that once Apple's tech exists, consumer AI is worth, to Anthropic or OpenAI, anything noticeably more than that $1B a year?

Maybe OpenAI strikes a deal to put something in Samsung phones. Let's say Samsung is ten times as desperate as Apple (which is how it looks, often). Still only $10B a year?

2026 consumer revenue projections from OpenAI are pitched at $14-15 billion, apparently. If they get that, it's the only year they will get that, because by late this year, everyone with an iPhone will have something useful built in.

Ed Zitron is a mouthy British rabble-rouser, but I think he is probably mostly on the money.

>If you are a consumer and you have a Mac or an iPhone, what do you need from AI that Apple's new offering won't provide? Why would you pay for ChatGPT, or even tolerate its inevitably increasingly desperate ad placements?

Probably the same reason the Gemini app is still well behind ChatGPT in consumer usage and adoption despite being preinstalled on android phones worldwide ? Why are people using GPT on Windows. There's even a copilot button on new keyboards!

Or maybe its the same reason Microsoft Edge is not the most popular Windows browser ? Maybe its the same reason Instagram threads did not even dent Tiktok ?

You are asking the question the wrong way around. People use and like what they like and have a strong preference to continue doing so.

This is just human behaviour. You don't need mind blowing moat. You begin to have problems only when:

- Users are constantly using your product unsatisifed.

- There's a competitor(s) with a significantly better offering that people are talking about.

Will Apple's offering be providing any meaningful/significant benefit over just using GPT ? If not, don't expect any miracles.

> If you are a consumer and you have a Mac or an iPhone, what do you need from AI that Apple's new offering won't provide?

I've been using Kagi Assistant for my AI needs, and have to say, Siri will probably replace it in the fall. The question will be, will I still want to keep Kagi for search, or will this new Siri get me where I need to be on all fronts? I need to start paying more attention to how often I actually use the search results vs just the AI summary.

There are things I didn't see Apple show and I wonder how Siri will handle it. One example would be basic coding. They mentioned LLMs in Xcode and Siri with the Shortcuts app and Safari Extensions, but I just had Kagi write up a webpage as a means to display a bunch of data it gave me. Gemini could also do this, so maybe it's not a problem for Siri, but it remains to be seen. There is also a question of what the experience will be like. ChatGPT, for example, handles writing up this code is a much nicer way than Kagi Assistant. Kagi feels more like the results I would have had from ChatGPT a couple years ago where it just dumps out the code in a block and any change is an entirely new code dump, meanwhile ChatGPT goes into a coding interface with a live editor. Going to Xcode feels like overkill, Siri will probably be not enough... so that's a gap in the market Apple may not serve. I assume there will be several things like this. The prosumer level of AI usage, if you will.

> 2026 consumer revenue projections from OpenAI are pitched at $14-15 billion, apparently. If they get that, it's the only year they will get that

Would you care to wager on that?

Because I would gladly take the other side at even odds.

> consumer AI is worth, to Anthropic

Anthropic does not really care about consumer AI. I expect consumer is where their least profitably customers are.

My primary expectation is that Apple will mostly increase usage of AI by general consumers. To me, this reads like Instagram adding stories. Did it stop Snapchat's growth? Sure. But I would be cautious about claiming it will take too many users away from OpenAI. I think it will be a fairly different product offering.

If you're paying to use ChatGPT right now, you might be using it for hobby coding, projects, or image generation. If you're paying a lot for ChatGPT, you're almost certainly using it for personal programming projects.

The $100/month (and up) subscribers aren't going to churn because of this, and I would be extremely surprised if the $20/month users do in any meaningful way.

It always seemed very natural to me that AI will move “down the stack”, where Open AI and Anthropic don’t really have a foot in the door.

Who makes consumer devices? Google

Who makes operating systems? Google

Who makes browsers? Google

Who makes the world’s most popular websites? Google

By the time 90% of average internet users get to chatgpt.com or whatever, they already went through several Google chokepoints, each layer is one more place Google can answer their questions.

And that’s not even getting into the chips, the data centers, the data, the talent, the consumer apps, the enterprise apps, the cloud platform, the brand, and of course the biggest cash printing machine in human history.

You would honestly have to be insane to bet against G.

The obvious answer to where the AI Labs get customers is Cloud GPUs. Most users (globally) have cheap phones with poor CPUs and small amounts of RAM. They can't run usable models locally, and it's not clear from the Google-Apple deal if G is selling access to their cloud compute as part of that $1B, or just sharing the weights/IP.

Apple themselves have said there is usage limits, with a subscription upgrade for more usage. So clearly AI Labs are directly competing on that front, it's just a normal default/chosen decision. Considering there are defaults and still successful competitors (eg. safari v chrome), there's no reason to think that competition can't handle this too.

Edit: I want to add that Google is also probably willing to give the model away at a discount to its true value in exchange for guaranteeing that their primary competition (who has tons of cash) won’t have an economic incentive to enter the foundation model training arms race.

Most users who actually want these features for anything more serious than summarization and style updates will probably find value in a modest subscription or ad-supported tier of higher quality models, even if just for occasional usage. Apple can provide this, but once you're comparing features, for many Gemini/Claude/ChatGPT may be a better fit.

Oh, and I think there is an unfortunate but real risk that once again, apple totally over-promises here, and their AI models that they ship end up being pretty poor, and that drives users further into subscriptions.

Let's imagine for a second that this a few billion dollars per year to Google is correct. Why do you assume that it covers everything to be done by Google itself - from hosting to running actual servers? Apple may very well pay Google a licensing fee, take a trained LLM and run inference themselves locally or even at a yet another 3rd party for example a datacenter corporation or any mix of these. And then a true real cost of running just the inference on every Apple device would be separated into a completely different org payment flows, very obscured and higher than just a license fee.

I'm not saying that this is what really happens. I'm saying that believing a CEO is as foolish and as grounded in reality as believing Ed Zitron.

You are kind of glossing over the B2B market where contract pricing is basically just MBA vibes and the fact that people don't really care necessarily about the performance of the language model once it hits a baseline. They care about how it integrates into their lives. Precisely where first mover advantage comes into play. Having to train a language model all over again is it's own sunk cost.

Whats a bit wild to me is Google's only selling point for their Pixel phones are increasingly Gemini.

Now that you can get Gemini, operated by Apple (with the Apple privacy features that come along with that), why would you ever consider going Android/Pixel (outside of running GrapheneOS, but I'm talking regular consumers here)?

Google isn't even making anything on the deal with Apple. They pay $20B/year to be the default search engine. This is Apple just giving a $1B a year discount to that to be able to license Gemini.

This would be greate for google, because most people, specially in the apple environment don't much care to install new tools if they have a native tool that works reasonable well. If you have an ai assistant that's minimally competent in your desktop or phone, you will not care to go after chatgpt or alternatives, and google will receive tons of data to improve their models.

I expect that a lot of the money will be in Enterprise AI.

ChatGPT has >1B users globally a mere 3 years in. iPhone is at 1.5B mostly concentrated in rich areas.

"Ed Zitron is a"

gobby ... British rabble-rouser. "Gob" is the Dick van Dyke approved word for mouth.

[dead]