According to a new report by The New York Times, lawmakers and government officials in Washington have raised concerns about Apple's AI deal with Alibaba to bring AI features to iPhones in China. iPhones sold in China still lack AI features, which might be a contributing factor to iPhone's dwindling sales in Apple's second-most-important market.
In February, Apple could strike a deal with Chinese Alibaba to include AI features in its iPhones in the country. iPhones sold in the US and the rest of the world have built-in ChatGPT. However, since OpenAI is not operating in China, Apple needs to collaborate with a local Chinese firm to include AI features in its iPhones. DeepSeek, Baidu, and Tencent were other Chinese tech firms with which Apple sought an AI venture deal.
As the report reads, people in Washington are "concerned that the deal would help a Chinese company improve its artificial intelligence abilities, broaden the reach of Chinese chatbots with censorship limits, and deepen Apple's exposure to Beijing laws over censorship and data sharing."
Apple's executives have reportedly met with officials at the White House and the House Select Committee to address concerns about the AI deal. However, the company's lack of transparency has raised eyebrows. When asked about the terms of the agreement, the data sharing with Alibaba, and potential legal commitments with Chinese regulators, Apple's executives were reportedly unable to provide satisfactory answers, as per the New York Times.
Apple's AI venture with Alibaba is also facing serious backlash from US lawmakers. Representative Raja Krishnamoorthi called Alibaba the "poster child for the Chinese Communist Party's military-civil fusion strategy." He said it is "extremely disturbing that Apple has not been transparent about its agreement."
If Apple fails to secure the AI deal with a local Chinese tech firm, it risks losing its Chinese customers to local brands like Xiaomi and Huawei. These brands have already established potent AI capabilities on their devices, and without a similar offering, Apple could see a significant shift in its customer base in China.
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