Apple is collaborating with Alibaba to integrate artificial intelligence features into iPhones for users in China, according to a report by The Information. This move comes as Apple seeks to bolster its position in the Chinese market, where it faces increasing competition from domestic rivals like Huawei, who have already incorporated AI tools into their devices.
The report by The Information indicates that Apple initially considered Baidu as its primary AI partner last year. However, Baidu's AI models reportedly did not meet Apple's requirements. Subsequently, Apple evaluated AI offerings from Tencent, ByteDance, Alibaba, and Deepseek. Ultimately, Deepseek was deemed unsuitable due to the company's relatively small team and limited experience in supporting large-scale deployments.
Alibaba's extensive data holdings, particularly regarding user shopping and payment behaviours, are understood to have been a significant factor in Apple's decision. This vast dataset is expected to be invaluable in training AI models and enabling the delivery of more personalised services to iPhone users. Apple and Alibaba have jointly submitted their co-developed AI features to China's cyberspace regulator for the necessary approvals.
The rollout of these AI capabilities is considered critical for Apple, especially given a reported dip in iPhone sales during the holiday quarter – traditionally Apple’s strongest sales period. This sales downturn has been partly attributed to the absence of advanced AI features, which have become a key selling point in the competitive smartphone market. Apple has projected strong sales growth for the current quarter, fuelled by hopes of a renewed demand for iPhones.
This partnership with Alibaba signifies a notable shift for Apple, a company known for its tight control over its product ecosystem. To maintain competitiveness in the crucial Chinese market, Apple is adapting its strategy by incorporating Alibaba’s AI technology. This raises questions about the extent to which regional market dynamics will influence the evolution of future Apple products.