Apple (AAPL) is finally taking another step toward the artificial intelligence (AI) market, but its efforts may be thwarted by an unexpected source.
While its big-tech peers have rushed to pour money into their AI endeavors, Apple has opted to invest substantially less money in its own. That sparked concern among some experts that it would likely fall behind in the race to the newest technology frontier.
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Despite these concerns, Apple continued moving forward, seemingly confident in its underwhelming AI strategy. It rolled out its Apple Intelligence platform to iPhone, iPad, and iMac users in October 2024.
Now, the company is gearing up to finally advance its AI efforts, something many Apple enthusiasts likely will cheer. But a challenge from Capitol Hill might be about to get in the way at a highly pivotal time.
President Donald Trump’s administration is heavily scrutinizing Apple’s new deal with a Chinese tech leader.
Image source: Bloomberg/Getty Images
Apple’s new AI deal may be in jeopardy, thanks to President Trump
Since its founding in 1976, Apple has focused on approaching technology differently than its competitors, a methodology championed by founder Steve Jobs. Given this part of its history, it makes sense that the company would take a different approach to AI than both its old and new rivals.
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While Apple Intelligence has been mostly successful, despite some problems with tools such as news summarization, the company has recently focused on enhancing its AI features. This included making a deal with Chinese tech leader Alibaba (BABA) to add AI-powered features to the iPhones it sells in China.
This plan seems to be in danger, though, as Apple’s decision draws backlash from Capitol Hill on both sides of the aisle. At a time when tensions between Washington and Beijing are rising steadily, politicians are heavily scrutinizing Apple’s deal with Alibaba on the grounds that it could help the Chinese company enhance its AI capabilities.
Reports indicate that members of the Trump administration, as well as House Select Committee on China, have asked Apple leaders about the deal directly. Their questions centered around the data that Apple would have to share with Alibaba and whether the Chinese company would be making commitments to its country’s regulators.
Current White House officials aren’t the only ones expressing strong concern regarding Apple’s potential deal with Alibaba. Rep. Raja Krishnamoorthi (D-Ill.), the ranking member of his party on the House Permanent Select Committee on Intelligence, has referred to Alibaba as a “poster child for the Chinese Communist Party’s military-civil fusion strategy.
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He also accused Apple of having a lack of transparency regarding its intentions to make a deal with Alibaba, describing it as “extremely disturbing.” So far, Apple has not issued any statements on the agreement or its plans to continue working with the Chinese company.
This could be extremely bad news for Apple
This comes at an extremely critical time for Apple. President Donald Trump recently made it clear he isn’t happy with the company’s decision to shift iPhone production to India as a result of his trade war, despite its plans to invest $500 billion in U.S. manufacturing in the coming years.
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Now Capitol Hill is threatening to further complicate Apple’s plans as the company maneuvers to continue expanding into one of its biggest markets, one whose government is still in heated trade negotiations with the Trump administration.
“Walking away from an Alibaba deal would have far graver consequences for Apple’s business in China, which accounts for almost a fifth of the company’s sales,” the New York Times reports. “The partnership with the Chinese tech company is critical to bringing AI features to iPhones in one of the world’s most highly regulated and competitive markets.”
For Apple, that isn’t just a loss of business, its a potential loss of market share. Chinese tech leaders like Huawei and Xiaomi are moving quickly to sell smartphones to domestic customers. Offering Aibaba’s AI features could be a critical way that Apple remains competitive in the east Asian smartphone market.
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