Apple will officially partner with Chinese internet giant Baidu to bring generative AI services to its devices in China, including the iPhone, Mac, and iPad, multiple media outlets reported yesterday. Apple Intelligence is expected to use Baidu’s advanced Ernie 4.0 model as part of the deal. The collaboration aims to bring Apple’s generative AI features to China in 2025, if the two companies can solve their disagreement on how user data is to be stored and employed.
Why it matters: The partnership marks a crucial step in Apple’s efforts to expand its AI capabilities in China, a market where it faces regulatory challenges and ever growing competition from local brands. The deal could significantly impact both companies’ financial performance, as Apple seeks to regain ground in a market where its revenue has been slipping for three consecutive years and Baidu looks for a boost following a revenue dip in Q3.
Details: The collaboration took nearly eight months to finalize, according to reports. Prior to this, Apple had held talks with Alibaba and another Chinese AI company before ultimately deciding to opt for Baidu.
- Apple is reportedly paying Baidu for the use of its AI models and has agreed to cover the costs of retraining and fine-tuning the models to meet specific requirements. This makes Apple one of the largest clients of Baidu’s Ernie model.
- However, the two companies remain in disagreement over the use of iPhone user data. Baidu has shown interest in collecting and analyzing data from iPhone users to improve its AI models, particularly in areas like understanding prompts and responding to common user scenarios. But sources familiar with the matter say Apple’s strict privacy policies prohibit the collection of such data.
- In addition to collaborating on smaller AI models for iPhone and other devices, Apple and Baidu are also working together on larger AI models for cloud applications. Siri, Apple’s virtual assistant, is expected to integrate Baidu’s AI models to enhance its search results. Baidu has served as Apple’s default search engine in China since 2012, and became Siri’s default search engine in the country in 2015.
Context: Apple has been rolling out new generative AI features in the US and other countries, but in China, the company has to partner with local firms to implement these technologies effectively and legally.
- The deal with Baidu is seen as a strategic move in response to fierce competition from local players like Huawei, whose Mate 70 series features its own AI functions, such as image generation and correction tools.
Apple has seen a decline in its China revenue in recent years, with iPhone 16 sales taking a hit in the Chinese market due to AI competition, making local partnerships crucial.
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