Apple Partners With Alibaba to Develop AI Features for iPhone Users in China
The Takeaway
• Apple started working with Alibaba to roll out AI features in China
• The companies have submitted co-developed AI features for Chinese regulator’s approval
• Apple tested DeepSeek’s models and did not proceed with them.
Apple has recently started working with Chinese internet and e-commerce giant Alibaba Group to roll out artificial intelligence features in China, according to one person with direct knowledge of the decision. The move is part of Apple’s strategy to offer more compelling software features to counter declining sales in the country, where it faces increasing competition from domestic brands like Huawei and Vivo.
Apple and Alibaba have submitted the Chinese AI features they co-developed for approval by China’s cyberspace regulator, the person added, indicating that the partnership has gained significant progress.
Apple last year began rolling out AI features—which Apple calls Apple Intelligence—on devices such as the iPhone in the U.S. and other countries, using a mix of Apple’s own AI models and OpenAI’s ChatGPT for user requests that Apple’s own models can’t handle. The features include improvements to the iPhone’s photo search, notifications and text rewriting capabilities. But Chinese regulators require Apple to work with local companies in developing all AI models for devices sold in China.
The iPhone maker began testing different AI models from prominent Chinese AI developers beginning in 2023 and last year selected Baidu as the primary partner, said two of the people. But the collaboration ran into snags because Baidu’s progress in developing its models for Apple Intelligence fell short of Apple standards.
As a result, Apple in recent months started to consider other options, assessing models developed by Tencent, ByteDance, Alibaba, as well as Deepseek, said two people with direct knowledge of the matter.
Apple eventually passed over Deepseek’s models because the Deepseek team lacked the manpower and experience required to support a large customer like Apple, said one of the people.
It’s unclear whether Apple has ruled out using Baidu’s models entirely, or whether Baidu’s models will be another option that Chinese iPhone users can select to power Apple Intelligence in the future.
The stakes are high for Apple to find a suitable AI partner in China to stem market share losses in the country. China is the second biggest market for Apple outside of the U.S.—accounting for 15% of sales in the December quarter. But China revenues have been falling for more than two years, sliding 11% in the December quarter, 7.7% in fiscal 2024 and 2.2% in 2023, as Chinese consumers switched to local phone brands such as Huawei and Xiaomi. Falling sales in China are hurting Apple’s overall performance.
Apple CEO Tim Cook said on an earnings call last month that sales in China in the December quarter were hurt by iPhones not offering Apple Intelligence. Huawei, Apple’s strongest rival in China, has been including generative AI features, such as image generation and proofreading tools, in some of its flagship models since May last year.
An Apple spokesperson declined to comment. Alibaba, Baidu, Tencent, ByteDance, and Deepseek did not respond to requests for comment.
Apple’s goal was to find a Chinese partner that could understand Chinese user requests based on their personal data. When it assessed the performance of the AI models developed by various Chinese companies, Apple was dissatisfied with their ability to understand user intentions and incorporate their real-world phone usage into the generated responses, said three people familiar with the company’s thinking.
Alibaba, as an e-commerce powerhouse, possesses more personal data on Chinese consumers than Baidu, such as users’ shopping and payment habits, which is one of the reasons why Apple decided to work with Alibaba, said the person with direct knowledge of the matter. The personalized dataset could be used to train models that will enable Apple Intelligence to deliver more customized services to users in China.
Alibaba is one of the leaders in China’s domestic AI industry, along with DeepSeek and TikTok owner ByteDance. Alibaba has developed its own large language model called Tongyi Qianwen. Its cloud unit, which is China’s biggest cloud service provider, has an edge in selling AI services to businesses. But Alibaba is behind ByteDance in making popular AI apps for consumers, as ByteDance’s Doubao chatbot app has far more users than Alibaba’s rival app.
Apple has said it would release a version of Apple Intelligence in simplified Chinese in April for users outside of China, and that its release in China would be subject to regulatory approval.
Chinese generative AI regulations require AI models to comply with specific security, privacy and content rules, and any models developed for consumer use require regulatory approval before launch.