Opening a smartphone these days seems a little strange. The rows of apps—once symbols of a thriving digital ecosystem—now feel oddly static, almost dated. Even though no one has fully expressed it aloud yet, there is a subtle feeling that something fundamental is changing as people in cafés talk more to AI assistants and scroll less.
Companies like Apple and Google built empires on the notion that software lives inside apps for more than ten years. The App Store served as a gatekeeper as well as a marketplace, discreetly collecting commissions and dictating what users could and could not do. That model performed remarkably well. With developers lining up and paying up to 30% just to be on the platform, Apple alone transformed its services division into a profitable machine.
| Category | Details |
| Companies | Apple Inc., Alphabet Inc. (Google) |
| CEOs | Tim Cook (Apple), Sundar Pichai (Google) |
| Core Business Model | App distribution + commissions (App Store, Google Play) |
| AI Strategy | Apple: model-agnostic integration (Siri + Gemini); Google: full-stack AI ecosystem |
| Estimated App Store Revenue | ~$85 billion annually (Apple, services segment) |
| Key Shift | AI assistants replacing app-based interactions |
| Notable Development | Apple integrating Google Gemini into Siri |
| Reference | https://www.bloomberg.com |
However, AI is not entirely appropriate for an app. That’s the unsettling insight that Silicon Valley is starting to realize. Users are increasingly asking a single AI assistant to do all of their travel planning, food ordering, and product research instead of downloading five different apps. It is more conversational, quicker, and—most importantly—completely avoids the App Store.
It seems like a turning point that Apple recently decided to rebuild Siri using Google’s Gemini models. Apple appears to be giving up ground in the race for AI. It’s not exactly the kind of move you make from a position of strength to pay Google about $1 billion annually. However, from a distance, a different interpretation—one that seems more deliberate—begins to take shape. It’s possible that Apple has no intention of winning the race for AI models.
Rather, it appears to be wagering that models will eventually become interchangeable, much like utilities. If that occurs, the person in charge of the interface gains actual power instead of the model itself. In the case of Apple, that interface is Siri, which is silently present on over a billion devices and is poised to grow into something far more than a voice assistant.
The similarities to what transpired during the search are difficult to ignore. Google dominated by controlling the information’s interface rather than the data itself. It seems that Apple is now promoting Siri as the interface for everything, including apps. And that presents an awkward question: what function do apps even serve if AI is capable of carrying out tasks directly?
Evidence of this change already exists. For instance, clicking through conventional search results is becoming less necessary thanks to Google’s AI Overviews. Users are receiving answers instantly rather than visiting websites or apps. It silently cuts off traffic that entire business models rely on, making it efficient—almost too efficient.
Even though they don’t always express it in public, developers are beginning to sense it. While some are attempting to make their services “agent-friendly” in the hopes that they will remain relevant when AI begins to act on behalf of users, others are experimenting with AI integrations. There’s a feeling of adjustment, but there’s also a trace of discomfort.
Google, on the other hand, is taking a completely different approach. Google is investing tens of billions in data centers, custom chips, and AI models, while Apple is keeping its infrastructure spending relatively low. For the time being at least, investors seem to think this is the right decision. Due in large part to its AI momentum, Alphabet recently surpassed Apple in market value for the first time in years.
There is a discernible intensity when you walk through Google’s developer events or watch its product demos. Everything seems to be focused on creating an entire AI ecosystem, including models, chips, and applications. It raises concerns about sustainability and is both ambitious and costly.
Apple, on the other hand, feels more restrained. Almost wary. It prioritizes user experience, privacy, and integration while letting others construct the pricey components. That strategy has proven effective in the past. However, the stakes seem higher and the rate of change is quicker this time.
The app economy isn’t going away anytime soon. Because humans are creatures of habit, tapping icons is a deeply rooted habit. However, habits do shift, particularly when something simpler becomes available. Furthermore, AI is unquestionably simpler because it can combine several steps into a single interaction.
How Apple and Google replace the revenue streams associated with app stores is less obvious. Commissions on in-app purchases, subscriptions, and app purchases are substantial sums. The economics start to look very different if AI starts to mediate or avoid these transactions.
Additionally, a subtle cultural shift is taking place. With millions of apps and countless options, the App Store used to be a symbol of choice. AI, on the other hand, seems more centralized. One system determines what to show you, what to prioritize, and what to disregard. It’s possible that this concentration of power will become more problematic than anyone anticipates.
However, it’s premature to declare the App Store’s demise. The developer ecosystem, the infrastructure, and the habits are all intricately linked. However, something is becoming looser. The edges are starting to fray. As this develops, there is a growing belief that software may not be something you download in the future. It could simply be something you discuss.
