Apple And Alibaba's AI Cooperation in China Attracts Scrutiny From The United States

Apple and Alibaba's AI cooperation in China attracts scrutiny from the United States

 

Apple believes that the future success of the iPhone depends on the ability to introduce new artificial intelligence features. But the tense relationship between the United States and China may lead Apple to launch plans for artificial intelligence in its second largest market - China.

According to three insiders, in recent months, the White House and congressional officials have been closely monitoring Apple's plans to reach an agreement with Alibaba aimed at allowing Alibaba's artificial intelligence technology to be used on iPhones sold in China. The White House is concerned that this deal will help Chinese companies enhance their artificial intelligence capabilities, expand the coverage of chatbots under censorship restrictions, and deepen Apple's risk of being constrained by Chinese laws in terms of censorship and data sharing.

This review is the latest example of the challenges faced by Apple as it attempts to maintain its business in the United States and China amid escalating geopolitical tensions. Three years ago, the US government successfully pressured the company to abandon its storage chip procurement agreement with Chinese supplier Changjiang Storage Technology Co., Ltd. Recently, the company has faced the challenge of tariffs imposed by the United States on Chinese made products such as iPhones, which may weaken its profits.

 

Abandoning cooperation with Alibaba will have more serious consequences for Apple's business in China, which accounts for nearly one-fifth of Apple's sales. The cooperation with Alibaba is crucial for introducing artificial intelligence features into the iPhone, as China is one of the most regulated and competitive markets in the world. Without cooperation with Alibaba, the iPhone may fall behind Chinese competitors such as Huawei and Xiaomi's smartphones.

 

Three anonymous sources said that officials from the White House and the House Select Committee on China Affairs have directly proposed the deal to Apple executives. During meetings with Apple executives and lobbyists, government officials inquired about the terms of the transaction, what data Apple will share with Alibaba, and whether Apple will sign any legal commitments with Chinese regulatory agencies. Two informed sources stated that during a meeting with a House committee in March, Apple executives were unable to answer most of the questions.

 

Washington's concerns about this agreement have been exacerbated by people's growing faith, as officials in Washington attempt to restrict Beijing's access to artificial intelligence technology and cut off its ability to manufacture and purchase artificial intelligence chips due to concerns about future conflicts between China and the United States.

 

The lack of transparency from Apple regarding its agreement is very concerning, "said Raja Krishnamotti, a senior Democratic member of the House Intelligence Standing Committee and Illinois Congressman, in a statement

 

No one knows why Apple chose to collaborate with Alibaba to develop artificial intelligence, "he said. People are seriously concerned that this collaboration will help Alibaba collect data to improve its model, while also turning a blind eye to the basic rights of its Chinese iPhone users. "

 

Apple has not publicly acknowledged its artificial intelligence plans in China, but Alibaba Chairman Joseph Tsai confirmed this in February of this year.

Washington is concerned that the deal between Apple and Alibaba will set a problematic precedent. American companies may help Chinese AI providers reach more users and use the data collected from these users to improve their models. The risk is that Baidu, Alibaba, ByteDance and other Chinese companies may use these improvements to help improve China's technology.

 

According to insiders, in order to restrict US China cooperation, the Trump government has discussed whether Alibaba and other Chinese AI companies should be included in the list of companies that are prohibited from doing business with US companies. The US Department of Defense and intelligence officials have also been reviewing Alibaba's related cooperation.

 

Greg Allen, director of the Wadvani Artificial Intelligence Center of the Center for Strategic and International Studies, a think-tank, said that Apple's cooperation runs counter to the efforts of the US government to slow down the development of China's artificial intelligence. Apple may have the incentive to help Alibaba improve its artificial intelligence system, as AI can make Chinese iPhones more useful, valuable, and easier to sell.

Allen said, "The United States is competing with China in artificial intelligence, and we just don't want American companies to help Chinese companies run faster

 

Last year, Apple upgraded its iPhone and introduced a new artificial intelligence feature called "Apple Intelligence". The company stated that iPhone users will be able to use its artificial intelligence products to aggregate notifications and receive improved writing tools for email and other information. In addition, the company has also released an upgraded version of Siri virtual assistant, which can combine information on the phone (such as someone's travel itinerary) with information on the internet (such as flight arrival time).

 

Apple has partnered with OpenAI to support some of its AI features.

Due to OpenAI not operating in China, Apple needs to find local partners to ensure that iPhones in the Chinese market have the same performance as those in the US market. Before reaching an agreement with Alibaba, the company had held talks with several Chinese technology companies. This year, the company has applied to Chinese regulatory authorities for approval of these AI functions.

 

Two insiders said that US congressional officials are concerned about Apple's application to Chinese regulators for approval of its cooperation with Alibaba. As artificial intelligence is an emerging field, the committee is concerned that Apple may make concessions or sign agreements that would subject it to Chinese law.

 

Apple has not yet announced when it will launch these AI features in China. During this year's conference call with analysts, Cook stated that iPhone sales have performed better in markets supported by Apple Intelligence.

 

Richard Kramer, a senior analyst at Arete Research, an investment consulting firm, said that if the deal with Alibaba fails, it could also have a chain reaction, as Alibaba is a large e-commerce retailer that can sell and promote iPhones. He said that this partnership could boost the iPhone after Apple's share of the Chinese smartphone market dropped from 19% in 2023 to 15% last year.

 

Kramer stated that without Alibaba, Chinese iPhone users could also download artificial intelligence applications. But this will bring a worse experience than competitors.