The iPhone is really where they started to work closely together. Here's Eric jokingly proposing a merger at the iphone launch:
https://www.youtube.com/watch?feature=player_detailpage&v=9h...
Steve comments again:
https://www.youtube.com/watch?v=RnkXa3eTV88
The Mac's 30th anniversary a few weeks gave the original Mac launch videos a lot of recent play where Gates and Microsoft basically played an eerily similar role to Google with the iPhone launch. Of course MS, like Google did want to do everything.
It's clear as day why Steve felt betrayed by Google. As he said in the internal town hall:
We did not enter the search business, Jobs said. They entered the phone business. Make no mistake teams at Google want to kill the iPhone. We won’t let them, he says. Someone else asks something on a different topic, but there’s no getting Jobs off this rant. I want to go back to that other question first and say one more thing, he says. "Don't be evil is a load of crap"
{I've edited in the two updates/corrections from the bottom}
http://daringfireball.net/linked/2010/01/31/jobs-town-all
