Open AI's blockbuster deal to buy Johnny Ives I. I.O. firm dropping just as Google was kicking off the second day of its IO conference. Could its new hardware bet take aim at Google's ecosystem? Our dear Dubose is digging into that for today's tech check. Morning, Dee.

IO versus I.O., right? Dropping $6.5 billion on Johnny Ives'O a day a Google I.O. keynote feels more like a provocation than a

challenge, something that Altman hasn't shot away from in the past last year. Just a day before

I.O. 2024, OpenAI held a live stream for its latest model stealing some of that Google Thunder.

Altman took the rivalry even further this year, signaling an entire strategy shift with

Johnny Ives' IO. Open AI is going fully vertical here, just as Google tries to reassert

its own lead. Prominent Apple analyst Ming Chi Quo posted on X this morning that the timing of

Allman's announcement, it was actually meant he believes to leverage a new narrative to redirect

attention from Google,

aligning with the next critical trend in the race, not as physical AI. It's also a reminder

to investors that we have moved past the just model performance. It's now about mind share,

distribution, and design. And that may be where the walled gardens start to crack.

Deep entrenched ecosystems, that has always been big tech's advantage.

And OpenAI is taking aim at exactly that from app store like GPTs to a Johnny

Ive designed device.

This is a bet on I.O.

As distribution, it is a distribution play that is aimed at bypassing

the phone, the browser, the operating system everywhere that the mega caps monetize best.

Now, Alphabet shares, they're up again today, bringing post-kino gains to about 5% as investors

digest the many advances laid out on Tuesday, including Google's own AI glasses showcased as a device for the AI era.

But as we've noted, Google didn't answer that bigger existential question.

Can it really transform its core business before AI transforms user behavior?

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