Apple is collaborating with Alibaba to introduce artificial intelligence features for iPhone users in China, according to a report by The Information on Tuesday. This partnership aims to address the uncertainty surrounding Apple's AI strategy in response to losing market share to domestic competitors in China, notably Huawei which integrated AI tools in their smartphones last year.
Following this news, Apple's stock increased by 1.5% in early trading, with U.S.-listed Alibaba shares also rising by 2.6%. Apple had initially partnered with Baidu last year for Apple Intelligence development, but the Chinese company's progress did not meet Apple's standards.
Subsequently, Apple explored AI models from Tencent, ByteDance (parent company of TikTok), Alibaba, and Deepseek. However, Deepseek was not chosen due to its team's limited resources and experience in managing a significant client base.
Apple and Alibaba have not yet responded to Reuters' requests for comments. Both companies have reportedly submitted their jointly developed Chinese AI features for approval by China's cyberspace regulator.
The implementation of these AI tools is crucial as iPhone sales declined during the holiday quarter, primarily due to the absence of expected AI features that were intended to be a key selling point for the latest devices. Despite this setback, Apple projects strong sales growth for the current quarter, with hopes pinned on a potential resurgence in iPhone demand.
The decision to partner with Alibaba was influenced by the vast amount of personal data the e-commerce giant possesses regarding users' shopping and payment behaviors. Leveraging this data, Apple aims to refine its AI models and offer more personalized services to its customers.