Ep. 117 | Apple Just Put Google Inside 1.5 Billion iPhones

Apple is paying Google a billion dollars a year to put Gemini inside Siri — and it changes everything about how small businesses use AI.

Michael and Frank break down the biggest AI distribution event in history: Google's Gemini model becoming the brain behind Siri on 1.5 billion iPhones. This is not a minor update. Apple is rebuilding Siri from scratch with a custom 1.2-trillion-parameter version of Gemini, running through Apple's Private Cloud Compute for privacy. The new Siri can hold conversations, remember context, take multi-step actions across apps, and generate images — all without downloading a separate app.

For small business owners, this means three things: your team now has a real AI assistant built into the device they already carry, your customers will use Siri to find and book local businesses (so your structured data matters more than ever), and the AI playing field just got leveled because every iPhone user gets this by default. The question is not whether you will have AI — it is whether you will use it better than your competitors.

Topics: Apple AI · Google Gemini · Siri Overhaul · Small Business AI · AI Distribution · Private Cloud Compute · AI Strategy

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Frequently Asked Questions

What is Apple doing with Google Gemini?
Apple has a multi-year deal with Google to use a custom 1.2-trillion-parameter Gemini model as the brain behind Siri. The new Siri, coming with iOS 27, will be able to hold conversations, remember context, take multi-step actions, and generate content — all powered by Google's AI running through Apple's Private Cloud Compute infrastructure for privacy.

Will Google see my data through Siri?
Apple says no. The on-device models handle most daily tasks without any data leaving your phone. For complex queries, the processing runs through Apple's Private Cloud Compute servers with secure enclaves and Nvidia confidential computing hardware. Google's model runs inside Apple-controlled infrastructure, and Apple states that user data is not shared with Google or retained for training.

How does this affect small businesses?
Three big impacts: First, your team gets a capable AI assistant built into every iPhone by default — no app downloads or subscriptions needed. Second, your customers will increasingly use Siri to find, evaluate, and book local businesses, making structured data and local SEO more important than ever. Third, since every competitor also gets this tool, the advantage shifts from having AI to using it better.

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About the Hosts

Michael is a small business owner and entrepreneur since 1983, founder of Cadenhead Services and 850 Media. He speaks from four decades of real operational experience — not whitepapers.

Frank is an AI — an OpenClaw-powered agent serving as Digital Media Director at 850 Media. An AI co-hosting a show about AI for business owners is not a gimmick. It is a live demo of exactly what the show is about.

Transcript

SPEAKER_00 0:00

Apple just did something nobody saw coming. They put Google inside 1.5 billion iPhones.

SPEAKER_01 0:07

And nobody's talking about what that actually means. The headline is Siri is getting smarter.

SPEAKER_00 0:13

The reality is way bigger than that. Way bigger. This is Apple handing the keys to its entire AI future over to Google. A billion dollars a year. That is not a partnership. That is a dependency.

SPEAKER_01 0:27

Let me break down what's actually happening. Apple announced a multi-year deal with Google. Google's Gemini model, specifically a custom 1.2 trillion parameter version, is going to be the brain behind the new Siri. The Siri overhaul codenamed Campos. It's the biggest change to Siri since the iPhone 4S launched it back in 2011.

SPEAKER_00 0:50

15 years of Siri being basically a timer setter and a weather checker. And now Apple's solution is just use Google?

SPEAKER_01 0:59

That's the provocative way to say it. The more accurate version is Apple is using Gemini as a teacher model. They're distilling it down into smaller models that run on your iPhone's chip locally. The complex stuff, the multi-step reasoning, the long-form writing, the image generation. That goes to the cloud. But here's the key part. Apple is running it all through what they call private cloud compute, their own secure servers, not Google's.

SPEAKER_00 1:25

Right, so Apple gets the brain power of Google's best AI, but they get to keep their privacy story intact. That is clever. I'll give them that.

SPEAKER_01 1:36

It is genuinely clever engineering. The on-device models handle quick tasks, personal stuff, things that never leave your phone. The heavier lifting goes through Apple's own infrastructure with NVIDIA confidential computing hardware. Google doesn't see your data. At least that is what Apple claims.

SPEAKER_00 1:54

And that claim is going to be tested. Because here's what I care about as a business owner: 1.5 billion devices. That is Apple's installed base. When iOS 27 ships later this year, every single one of those iPhones, iPads, Macs gets a Siri that actually works, a Siri that can hold a conversation. Remember what you asked five minutes ago. Draft emails, summarize documents, search the web, generate images. This is not a minor update. This is Siri going from a party trick to a real assistant.

SPEAKER_01 2:30

And that is where it gets interesting for small business owners. Because right now, if you want a real AI assistant, you have to download ChatGPT or Gemini or Claude. You have to open a separate app. You have to remember to use it. Siri being genuinely useful means that 1.5 billion people suddenly have a competent AI built into the device they already carry everywhere. No download required, no subscription to figure out, no learning curve.

SPEAKER_00 2:59

That is the unlock. The friction is zero. Every small business owner I know has an iPhone. Their employees have iPhones, their customers have iPhones. When Siri becomes actually good, it changes the default behavior of a massive chunk of the population.

SPEAKER_01 3:16

Let me give you the technical picture of what the new Siri can actually do. First, it is becoming a chatbot style interface, not the floating orb that disappears after one question. A real conversation with history, context, and memory. Second, it understands what is on your screen. You can be looking at an email and say, summarize the action items, and it just works. Third, multi-step actions. You can say, find the invoice from last week, pull out the total, and text it to Sarah, and it chains those steps together.

SPEAKER_00 3:48

That last one is the big deal for business owners. Right now, doing that means opening three different apps, copying and pasting, hoping you don't make a mistake. Siri doing it in one command, that saves real time, not theoretical time, real minutes per task that add up over a day, a week, a month.

SPEAKER_01 4:08

And there is an extensions framework coming. Users will apparently be able to choose which AI model powers their Siri. Gemini, ChatGPT, maybe Claude. Apple becomes the distribution layer, the front door for all of these models. That is a power move.

SPEAKER_00 4:24

Wait, say that again. Apple becomes the distribution layer?

SPEAKER_01 4:29

Exactly. Instead of Google and OpenAI and Anthropic fighting for app downloads and subscriptions, Apple puts them all behind a single interface that 1.5 billion people already have. Apple controls the user relationship. The AI companies become interchangeable suppliers. Apple takes a cut, controls the experience, and keeps the brand. It is the same play they made with search. Google pays Apple billions to be the default search engine on Safari. Now Google pays Apple billions to be the default AI brain on Siri.

SPEAKER_00 5:01

That is a stunning parallel. And it worked for search. Google has been paying Apple an estimated 20 billion a year for that default search spot. Now they are paying another billion for the AI spot. Apple is essentially renting out access to their user base. And Google is happy to pay because 1.5 billion devices is the largest AI distribution channel on the planet.

SPEAKER_01 5:29

It also mirrors how Apple handled maps. Remember, Apple Maps was terrible at launch. Instead of fixing it alone, Apple invested billions in data collection, fleet cars, and LIDAR mapping. But with AI, they're not even trying to build the model themselves. They tried that with Apple Intelligence last year, and it was underwhelming. So they went to Google, the company they spent years positioning themselves against on privacy.

SPEAKER_00 5:56

And that is the tension that makes this story so interesting. Apple's entire brand is we protect your data. Now, the core intelligence layer of their flagship product is built by the company that makes its money from collecting data. Apple's answer is private cloud compute. Your data stays on Apple servers, Google's model runs, but Google does not see your queries.

SPEAKER_01 6:21

The architecture supports that claim. The models run inside secure enclaves on Apple-controlled hardware. Even the NVIDIA confidential computing instances use encryption during processing. Google literally cannot see the data passing through their own model. That is the technical reality. Whether people trust it is a different question.

SPEAKER_00 6:41

And trust is everything. Apple's entire marketing for the last decade has been about privacy. The what happens on your iPhone stays on your iPhone campaign. Now they're asking people to trust that Google's AI model running on Apple servers does not leak data back to Google. That is a big ask, even with the technical safeguards.

SPEAKER_01 7:07

It is a big ask, but it is also a different trust model than most people assume. When you use Chat GPT, your data goes to OpenAI. Period. When you use the new Siri for simple tasks, your data does not go anywhere. It stays on the device. Only the complex queries go to the cloud and through Apple's infrastructure. It is not perfect, but it is a better default than most AI tools offer today.

SPEAKER_00 7:32

Because here's the thing, Frank: small business owners handle sensitive data, customer information, financial records, legal documents. If you run a medical office, a law firm, an accounting practice, you have compliance requirements. You cannot just feed client data into an AI tool without knowing exactly where it goes.

SPEAKER_01 7:57

And that is where the on-device piece matters. Apple is making a real bet that local AI, the stuff that never touches the cloud, will handle most of what people actually need day to day. Drafting a response to a customer, summarizing a meeting, pulling action items from an email. Those tasks can run entirely on your iPhone's chip. No data leaves the device. No cloud involved.

SPEAKER_00 8:20

That is actually a meaningful differentiator. Because right now, if you use ChatGPT for your business, your data goes to OpenAI's servers. If you use Gemini, it goes to Google. With Apple's approach, the everyday stuff stays on your phone. Only the heavy lifting goes to the cloud. And even then through Apple's infrastructure.

SPEAKER_01 8:42

For a small business owner, think of it this way: you know how you hesitate before pasting a customer's information into Chat GPT? That hesitation goes away for most daily tasks. The AI lives on your device. It does not need to phone home for simple requests. That is a trust shift.

SPEAKER_00 9:00

Okay, so let's talk about what this means in practice. If you are a small business owner listening to this, what do you actually do with this information?

SPEAKER_01 9:10

Three things. First, start organizing your data now. The new Siri works best when it can access your information. If your SOPs, pricing sheets, product details, and templates are scattered across random notes, apps, and paper files, Siri cannot help you. Get everything into Apple Notes, Files, or iCloud Drive. Clean, searchable, structured.

SPEAKER_00 9:33

Second, start thinking about workflows. What tasks do you repeat every day that involve reading, writing, or searching? Because those are the tasks Siri is about to handle. Email drafts, meeting summaries, document reviews, customer follow-ups. Write down your top 10 repetitive tasks. When iOS 27 lands, you will be ready to hand those off immediately.

SPEAKER_01 9:57

Third, and this is the one most people miss, think about your customer experience. If every iPhone user suddenly has a competent AI assistant, your customers are going to use it to interact with your business. They will ask Siri to find a plumber near me or book an appointment with that mechanic. If your business information is not structured in a way that Siri can find and act on, you become invisible.

SPEAKER_00 10:22

That is a critical point. It is the same story we have been telling about Google search and AI overviews, but now it is happening inside the phone itself. The assistant becomes the front door to local business. If Siri cannot find you, you do not exist.

SPEAKER_01 10:39

And this is not just about discovery, it is about action. The new Siri is not just finding information, it is taking action, booking appointments, sending messages, making purchases. If your business is set up to receive those actions, you capture that customer. If not, they go to the business that is.

SPEAKER_00 10:59

Think about it from the customer's perspective. You are a homeowner with a pipe burst at two in the morning. You grab your phone and say, Siri, find me an emergency plumber nearby who can come right now. If that plumber has their business data structured properly, Siri finds them, shows their availability, and books the call. The customer never opened Google, never scrolled through Yelp. The AI made the choice.

SPEAKER_01 11:25

This is why local SEO and structured data matter more than ever. Make sure your Google business profile is complete. Make sure your website has proper schema markup. Make sure your business name, address, phone number, and services are consistent everywhere. Because Siri is going to pull from all of those sources.

SPEAKER_00 11:42

Now, let me address the elephant in the room. Apple is paying Google a billion dollars a year. That means Apple could not build this themselves. Their own AI efforts, Apple intelligence, fell short. They needed Google. And that admission is bigger than any feature announcement.

SPEAKER_01 12:01

It confirms something the AI industry has been whispering for a while. Building frontier models is incredibly expensive and technically brutal. Apple, the most valuable company on Earth with more cash reserves than most countries, decided it was cheaper and faster to pay Google than to build their own model from scratch. That tells you everything about where the power sits in AI right now.

SPEAKER_00 12:23

It sits with the companies that have the compute, the data centers, and the talent to train these massive models. Google, OpenAI, Anthropic, Meta. Apple is a hardware and ecosystem company. They make the best chips, they make the best phones, they have the best user base. But the intelligence layer, they are renting that from Google.

SPEAKER_01 12:47

And that rental comes with antitrust risk. Remember, Google is already facing scrutiny over the $20 billion search deal with Apple. Regulators see these agreements as Google using Apple's distribution to maintain its monopoly. The AI deal is going to get the same attention. The EU and the U.S. Department of Justice are going to look at a billion-dollar annual payment for AI access and ask whether this is competitive or anti-competitive.

SPEAKER_00 13:14

For a small business owner, the antitrust angle matters because it could delay or modify how this rolls out. If regulators force Apple to offer equal choice between AI providers at setup instead of defaulting to Gemini, that changes the dynamic. But the core reality remains: 1.5 billion iPhones are about to get a real AI assistant. That is happening regardless of what regulators do.

SPEAKER_01 13:41

The timeline to watch is WWDC on June 8th. That is when Apple is expected to officially announce iOS 27 and the new Siri. The full rollout will likely come with the new iPhones in the fall, but some features are already showing up in iOS 2016.

SPEAKER_00 14:03

So this is not some distant future thing. It is already starting. And by the end of this year, hundreds of millions of people are going to be using Gemini-powered Siri without even knowing it. Because Apple is not going to put a Google logo on it. It will just say Siri.

SPEAKER_01 14:23

Which is exactly how Apple wants it. They get the capability. Google gets the compute revenue. The user gets a better experience. And Apple keeps the brand. Everyone wins. Except maybe the other AI companies who now have to compete with a product that is pre-installed on a billion and a half devices.

SPEAKER_00 14:42

Here is my bottom line. This is the single biggest AI distribution event in history. Bigger than ChatGPT's launch because ChatGPT had to be downloaded. Bigger than Gemini's app because it had to compete with ChatGPT. This is Google's AI being placed inside the default assistant on the world's most popular premium smartphone. No download, no sign-up, no choice. It is just there.

SPEAKER_01 15:10

And for small business owners, that means two things. One, your AI strategy just got simpler and harder at the same time. Simpler because your team already has a capable AI assistant in their pocket. Harder because so does every one of your competitors. The advantage is not in having the tool, it is in how you use it.

SPEAKER_00 15:31

Two, the local search game is about to get disrupted again. Siri becoming a real assistant means people stop Googling and start asking: if your business is not structured for AI discovery, you are going to lose ground fast. We have been saying this since episode 21. The clock just got a lot louder.

SPEAKER_01 15:51

And one more thing that most coverage is missing. Apple is reportedly going to let users choose between AI models, Gemini by default, but ChatGPT and Claude as options. That means the AI experience on iPhone is not just a Google experience. It is a marketplace. Apple is building the App Store for AI models.

SPEAKER_00 16:13

Which is an incredibly smart business move. Apple takes a cut, controls the interface, and keeps the user relationship. Just like they did with the App Store, just like they did with search, the platform always wins.

SPEAKER_01 16:26

And every small business owner listening to this should be thinking about the same thing. When the platform changes, you either adapt or you become invisible. The iPhone just became the most important AI platform on earth. Your move. Apple put Google inside 1.5 billion iPhones. But the story is not about Apple or Google. It is about the 1.5 billion people who are about to have a competent AI assistant by default. And the businesses that are ready for that shift are the ones that are going to win.

SPEAKER_00 16:58

That is the show. The biggest AI distribution event in history just happened, and most people do not even realize it yet. Now you do. We will see you next time on Control AI Profit.