NAIROBI, Kenya- Apple is banking on its upcoming AI features to boost iPhone sales, especially in China, where demand has been lagging.
But there’s a hiccup: ChatGPT, which Apple plans to integrate into Siri, is banned in China.
This creates a significant challenge as Apple tries to catch up with AI-savvy rivals like Microsoft, Google, and Samsung.
The China Challenge
Earlier this month, Apple showcased its proprietary technology, Apple Intelligence, along with a partnership with OpenAI to incorporate ChatGPT into Siri.
This move is part of Apple’s strategy to expedite the integration of the latest AI technology.
When Siri needs extra help, ChatGPT can step in. However, China’s strict regulations on generative AI complicate things.
The Cyberspace Administration of China requires companies to get approval before deploying AI models, and so far, only Chinese companies have received the green light.
Apple is reportedly searching for a Chinese AI partner ahead of the iPhone’s anticipated September launch but hasn’t sealed a deal yet.
This urgency is fueled by a 10pc drop in Apple’s smartphone sales in the first quarter of this year, largely due to decreased demand in China.
Nationalism, a tough economy, and fierce competition have eroded Apple’s market share in its second-largest market .
Regulatory Hurdles in the EU
The AI challenges for Apple aren’t limited to China. In the European Union, Apple faces obstacles due to the Digital Markets Act (DMA).
The DMA’s requirements could force Apple to compromise on user privacy and data security.
As a result, Apple announced that it might not roll out key AI features like iPhone Mirroring and SharePlay Screen Sharing in Europe this year.
“Due to the regulatory uncertainties brought about by the Digital Markets Act, we do not believe that we will be able to roll out three of these features—iPhone Mirroring, SharePlay Screen Sharing enhancements, and Apple Intelligence—to our EU users this year,” said an Apple spokesperson.
The Race to Secure a Chinese Partner
With Chinese competitors like Huawei experiencing a 70pc increase in smartphone sales in the first quarter, Apple is under pressure to secure a local AI partner quickly.
Without the full AI experience, Chinese consumers might hesitate to invest in new iPhones.
“Apple is very likely to seek a local partner in China in place of OpenAI, because simply put, it needs to,” said Nabila Popal, a senior director at IDC Research.
Apple’s AI journey is a high-stakes game, balancing innovation with regulatory compliance.
As it seeks to reinvigorate its sales in China and navigate European regulations, securing local partnerships and addressing regulatory challenges will be crucial.
