Apple Siri AI icon shown on a smartphone, with Apple Intelligence in the background.
Jonathan Ra | Noor Photos | Getty Images
apple China is one of the iPhone maker’s most important markets, and the push for artificial intelligence faces some major challenges there as Beijing maintains strict regulations on the popular technology.
The uncertainty in China comes as Apple loses market share in the world’s second-largest economy to a resurgent Huawei and other local smartphone makers, which are touting their artificial intelligence capabilities.
Apple Intelligence is an initiative by the Cupertino giant to bring artificial intelligence to its devices. It features an improved version of Apple’s voice assistant Siri, as well as the ability to automatically organize emails or transcribe and summarize audio clips.
Apple Intelligence will be available in U.S. English this fall, with additional languages, features and platforms coming next year, Apple said. However, the company remained mum on what it would offer in China as it unveiled its artificial intelligence products at its annual developer conference this month.
Analysts told CNBC that this may have something to do with China’s strict regulations on artificial intelligence, as Apple tries to figure out how to enter this complex market.
“China is in a different world when it comes to artificial intelligence given the regulatory environment there, so China is a big asterisk in Apple’s big announcement last week,” Bryan Ma, vice president of devices research at IDC, told CNBC via email. “
Over the past few years, Beijing has enacted various regulations focusing on areas ranging from data protection to large language models that support the massive data sets of applications such as ChatGPT.
China’s artificial intelligence market is heavily regulated. Some of these rules include requiring LLM providers to obtain approval for commercial use of their models. Generating AI providers are also responsible for removing “illegal” content.
Apple’s AI challenge in China
Navigating these rules will be tricky for Apple.
First, some of Apple Intelligence’s features are based on Apple’s own language model, which runs both on the phone and on the company’s own servers.
Under Chinese regulations, Apple’s artificial intelligence models may need approval from authorities.
Secondly, one of the biggest announcements this month is that Apple’s voice assistant Siri can utilize OpenAI’s ChatGPT to fulfill certain requests, but ChatGPT is banned in China, which means Apple must find an equivalent domestic partner.
Baidu and Alibaba is one of the Chinese tech giants with its own LL.M. and voice assistant, listing them as companies Apple could partner with.
At the same time, China’s Internet is under heavy censorship, and regulators are worried about the potential of artificial intelligence services to generate content that may be contrary to Beijing’s views or ideology.
Canalys analyst Nicole Peng told CNBC via email that Apple may have to build an on-device AI model and a cloud-based AI model that complies with local regulations.
Ben Wood, chief analyst at CCS Insight, said that for Apple to succeed in China, another part of artificial intelligence is to create a localized artificial intelligence experience on its devices that attracts Chinese users.
“Localizing the Apple Intelligence experience will be a significant challenge for Apple,” Wood told CNBC. “As with all technology deployments, there are nuances in how the service is delivered to respect the specific customs, regulations and use cases of a given country.”
privacy
A key part of Apple’s pitch during its AI launch was its focus on privacy. The company announced Private cloud computing, where artificial intelligence is processed on servers owned by Apple. Apple said the processed data will not be stored.
Whether the tech giant will be able to fully own its own servers is another question. China iCloud data is stored on servers operated by third parties located in China.
That could mean Apple may need to forge similar partnerships for its artificial intelligence computing servers, opening the tech giant to criticism over the actual privacy of data.
“In heavily regulated markets like China, maintaining intact user privacy in the age of artificial intelligence will be the biggest test for Apple,” Neil Shah, partner at Counterpoint Research, told CNBC. “For Apple , it will be a challenge to fully control your own private computing servers in China.”
CCS Insights’ Wood said Apple’s focus on privacy could help bring artificial intelligence capabilities to the market. China passed a major data protection law in 2021 aimed at limiting how information is collected and stored.
“Apple’s continued focus on privacy and security practices may help appease local regulators, and Apple is not afraid to make concessions if needed,” Wood said.
Apple’s road to artificial intelligence in China
CNBC reached out to Apple about private cloud computing and the company’s AI ambitions in China. A spokesperson did not directly answer the questions but pointed to a CNBC interview fast company Craig Federighi, Apple’s senior vice president of software engineering, collaborated with the Business Journal.
Federighi expressed his desire to introduce Apple Intelligence to China.
“We certainly want to find a way to bring all of our best product features to all of our customers,” he said in an interview with Fast Company. He added, “In some parts of the world, there are regulations that need to be passed. ”.
The Apple executive said that the process of introducing artificial intelligence products to China is ongoing, but did not give a timetable.
Smartphone makers around the world are touting their artificial intelligence capabilities as a way to sell high-end phones to consumers who want to use their devices longer.
Canalys data shows that Apple has been facing many challenges in China, with its market share falling to 15% in the first quarter of 2024, compared with 20% in the same period last year. Huawei’s smartphone business was crippled by U.S. sanctions but has now revived to become China’s largest smartphone maker, competing with Apple with phones targeting the high-end market.
Apple has lagged behind domestic rivals in rolling out artificial intelligence features in China, which is unlikely to adversely affect iPhone sales.
Counterpoint Research’s Shah said: “For Apple, deploying Chinese-level Apple intelligence will be a marathon, not a sprint. It will be deployed in phases over several years until Apple is confident, and before then it will have to face against some competition.
Wood said Apple’s control over its hardware and software integration will allow it to deliver a different experience than its competitors.
“Apple has an uncanny ability to explain its services and features better than its competitors, even if it’s essentially the same experience or only a subset of what their competitors offer,” Wood said. “
“Although rival Chinese smartphone makers are currently focusing on artificial intelligence, Apple should remain in a strong position.”
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