Apple’s new problem in China: ChatGPT is blocked there

Ali Song/Reuters

A man checks his phone near the Apple logo outside its store in Shanghai, China, on September 13, 2023.

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Apple is counting on upcoming AI features to boost iPhone sales, especially in China, where demand is lagging. But there’s a catch: ChatGPT — which will soon be integrated into Siri — is banned in China.

In a presentation earlier this month, Apple announced (Camel) showed off its own technology called Apple Intelligence to power attractive new AI Features A. announced Partnership with OpenAI To use ChatGPT viral tool also in limited capacity. (When Siri is activated and needs more help answering a query, ChatGPT can step in.)

The move signals how Apple is trying to accelerate the latest buzz in technology at a time when tech rivals such as Microsoft, Google, Meta and Samsung have found their mettle in artificial intelligence. foot. A deal with OpenAI could help Apple close the gap.

but China It is one of the first countries in the world to regulate the generative AI technology that powers these popular services. In August, the Cyberspace Administration of China, the country’s largest internet monitoring body, began operating New guidelines For industry, requiring companies to obtain approval before publishing. the organization And he agreed More than 100 AI models as of March, all from Chinese companies.

according to a report Apple is looking for a Chinese artificial intelligence company to partner with ahead of its expected iPhone launch in September, but has not yet reached an agreement, the Wall Street Journal reported Thursday.

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Apple did not respond to a request for comment.

The need to find a partner – and quickly – comes at a time when Apple’s smartphone sales are booming He landed by a staggering 10% in the first quarter of this year, according to market research firm IDC, largely due to a sharp decline in iPhone sales in China. The company lost momentum in China, where nationalism, a harsh economy and increasing competition affected sales. China is the company’s second largest market.

Limitations on new AI tools may not be limited to China. In a statement sent to CNN after this article was published, Apple said it was “very excited” to bring the features to customers around the world, but it faces regulatory challenges in the European Union as well.

The company said it does not believe it will be able to roll out AI features in Europe this year.

“Due to regulatory uncertainties caused by the Digital Markets Act (DMA), we do not believe we will be able to roll out three of these features – iPhone Mirroring, SharePlay Screen Sharing improvements, and Apple Intelligence – to our users in the EU. A company spokesperson said in a statement this year.

“Specifically, we are concerned that the DMA’s interoperability requirements may force us to compromise the integrity of our products in ways that threaten user privacy and data security,” he added. “We are committed to cooperating with the European Commission in trying to find a solution that will enable us to offer these features to our EU customers without compromising their safety.”

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In China, concerns over iPhone sales continue to grow as Chinese smartphone maker Huawei’s smartphone sales growth reached 70% in the first quarter, according to Counterpoint Research.

She added that if a solution is not found by the fall, Chinese consumers may sense the change and choose to wait until they can get the full AI experience with Apple.

“Apple is very likely to look for a local partner in China rather than OpenAI, simply because it needs to,” said Nabila Popal, a senior director at research firm IDC. “Chinese consumers are They expect their premium phones to have the latest AI functionality and may be reluctant to spend more than $1,000 on hardware that offers it. You don’t have all the bells and whistles of AI.

“Apple’s real growth in China will come in the long term, as Apple Intelligence evolves to deliver more use cases, expands language support beyond English, and when Siri can leverage other local AI models to provide… ChatGPT-like functionality”.

Meanwhile, some AI companies in China may be better suited to target consumers anyway, such as offering more local accents than are currently found in foreign AI models, noted Rhys Hayden, an analyst at ABI Research.

Apple would not be the first foreign company to work with the Chinese Cyberspace Administration on artificial intelligence and smartphones. In January, Samsung teamed up with Chinese tech giant Baidu.Bedo) to use its AI model to help power its translation service. It works with another AI company, Meitu, for photo editing tools. In other parts of the world, Samsung is using its own AI technology, along with Google’s (Google) The Gemini AI model, which is also banned in China.

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However, Samsung represents less than 1% of the total market in China, according to Counterpoint Research.

Although the clock is ticking for Apple to secure a partnership before its software launches in the fall, Jeff Feldhack, director of research at Counterpoint, believes it will be able to close a deal in time.

“Apple should be able to get a partnership aligned very quickly because they have a strong global install base, and working with them will be a gem for these companies,” he said, noting that it will soon be established as a strong AI player in the country.

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