Apple Intelligence Faces Hurdles in China: Privacy Concerns and Technical Challenges with Baidu Partnership

Apple Intelligence reportedly aims for China debut amid Baidu integration hurdles

Apple Intelligence is targeting launch in the Chinese market by April 2025, but reports indicate that its collaboration with Baidu is facing difficulties. According to 9To5Mac, citing information from The Information, engineers from Apple and Baidu are working on adjusting Baidu's Ernie Bot for better integration with the iPhone. However, the bot has shown inconsistencies in response accuracy, even for basic queries. Furthermore, Apple and Baidu have encountered disagreements regarding privacy policies. While Baidu wishes to retain and analyze user AI search data, Apple Intelligence's key differentiator is its "Private Cloud Compute," which ensures data encryption and prevents devices from communicating with servers. The Wall Street Journal first reported in April 2024 that Apple approached Baidu for collaboration in the Chinese market for Apple Intelligence, indicating that both parties were still in the exploratory phase. Based on the report by The Information, it appears that their cooperation is now in progress. The Chinese government mandates that generative AI services targeting the general public must comply with regulations set by the Cyberspace Administration of China before they can be launched. Xinhua New Agency noted that as of August, over 190 services had passed registration. Industry observers generally believe that Apple's AI features will find smoother entry into the Chinese market through partnerships with local companies. During a recent earnings call, Baidu stated that Ernie Bot has gained market recognition with the company now handling approximately 1.5 billion API calls daily. Chinese companies including Vivo and Oppo have already integrated Ernie Bot's API into their smartphones. Before the release of the iPhone 16, market analysts believed that Apple Intelligence would be a key factor influencing sales. According to data from the China Academy of Information and Communications Technology, sales of overseas smartphone brands in the Chinese market dropped from 11.15 million units in October 2024 to 6.22 million units, representing a year-on-year decrease of 44%. In contrast, the overall market grew by 1.8%. This data reflects the intense competition faced by the iPhone 16 series in China against other brands.

Apple struggles to fit Apple Intelligence in with China's demands

The deal between Apple and local firm Baidu to bring a form of Apple Intelligence to China is reportedly faltering because of technical and philosophical privacy issues. Apple Intelligence could provide the boost to iPhone sales in China that Apple needs, after years of decline and increasing local competition. But while Apple theoretically could go it alone with Apple Intelligence in the country, in practice it has to partner with a Chinese firm -- and it's facing difficulties. While it has now partnered with Baidu, after local media first denied it had, The Information says that the partnership is struggling. The difficulty includes how Baidu's large language models (LLMs) have been failing to provide the kind of responses Apple wants for typical iPhone user questions. An example given is how Baidu AI would respond to a request for a restaurant recommendation by using the data it has been trained on. Apple wants Apple Intelligence to personalize the answer by taking into account what else the user is doing, and where they are. Perhaps as a consequence, Baidu is said to want to improve its training -- and so retain user data to achieve that. But Apple specifically will not allow that. These failures are happening despite how Baidu is using its most advanced LLM, called Ernie 4.0. Also, where Apple is not paying OpenAI for its ChatGPT integration, it is paying Baidu. This makes Apple now one of Baidu's largest customers, though the two firms have worked together for over a decade. In China, iPhone users use Baidu instead of Google for searches, for instance, so it makes sense for Apple to use them to circumvent any problems with China's regulators. Just as with the US and the rest of the world, Apple wants to have Apple Intelligence working on-device as much as possible. Consequently the two companies are working on a smaller version of Ernie that would run on iPhones, and a larger one that will run in the cloud. Apple Intelligence is already delayed to 2025 in China but the impact of these issues will affect more than its launch date. It's likely to have an impact on overall iPhone sales in the country too. For while analysts such as JP Morgan say there are signs that iPhone sales are recovering in China, not all evidence agrees. Most recently, Apple saw iPhone sales drop by a double-digit percentage during China's Singles Day shopping event, beaten because of increasing competition from local rivals such as Huawei.

Report: Apple Struggling to Adapt Apple Intelligence for China

While it is now available in the United States and several other regions, Apple Intelligence is not available in China due to the country's restrictive security, privacy, and content obligations, which demands that any public AI technology obtains regulatory approval. This led Apple to partner directly with Baidu, a Chinese company, to deliver Apple Intelligence features in the country expediently. Citing two individuals said to be familiar with the situation, the report claims that Apple and Baidu are racing to adapt the latter's most advanced large language model, Ernie 4.0, to work well for iPhone users both via the cloud and on-device. Apparently, the models have had difficulty understanding prompts and providing accurate responses to common scenarios. While Baidu wants results to be driven by data used to train its model, Apple wants it to provide a more personalized answer based on a user's iPhone usage. Likewise, the two companies have clashed over the use of iPhone user data to train and improve the AI models. Baidu reportedly wants to save and analyze data from iPhone users, but this is forbidden under Apple's privacy commitments. The issues are particularly notable since Apple hopes to use Apple Intelligence to rejuvenate iPhone sales in China, where revenue has declined for three consecutive years due to heightened competition from local smartphone brands such as Huawei that tout a wide array of AI features. Unlike its collaboration with OpenAI, which reportedly comes at no cost to either company, Apple is actively paying Baidu a fee to use its AI models and has agreed to cover computing costs. Apple already uses Baidu for default search results in Safari and Siri.

Apple Intelligence in China Might Be Backed by Baidu's Ernie AI Model

Currently, Apple Intelligence is not available in China and the EU region Apple Intelligence, the company's in-house suite of artificial intelligence (AI) features for its devices, will reportedly be provided by Baidu's AI models in China. The Cupertino-based tech giant has so far not released its new AI features in the European Union countries and China due to regulatory obstacles. While the problem in the EU largely revolves around user privacy and interoperability concerns, in China only the AI models that are approved by the government are permitted to operate. This is why Apple has reportedly formed a partnership with Baidu to introduce AI features in the country. The Information reported that Apple and the Chinese search giant have partnered for Apple Intelligence features in the country. Since Apple is struggling to get approval for its native large language models (LLMs), the iPhone maker has reportedly resorted to partnering with local AI firms to provide the backend processing for its AI features. As per the report, Apple's AI tools will be powered by Baidu's Ernie 4.0 multimodal AI model, which was released in October 2023. This partnership is different from the one the iPhone maker has made with OpenAI. In the case of the latter, ChatGPT is only used for certain features, and the user will be notified of the same. However, Baidu will reportedly handle all the generative AI tasks for the company. Apple will reportedly also be paying Baidu to use the Ernie 4.0 AI model, whereas the deal with OpenAI is said to not involve any monetary transaction. Apple Intelligence will also not include ChatGPT support in China. However, the duo are facing certain challenges in streamlining the AI capabilities for Apple devices. According to the report, engineers from both companies are working hard to optimise Baidu's LLM, however, the Ernie 4.0 AI model is struggling to comprehend prompts and provide accurate responses for the scenarios where an iPhone user might need the AI. Another challenge is said to be on the privacy front. Baidu reportedly wants to collect data from Apple users who use the AI-powered search feature. However, this will break the privacy policy of the Cupertino-based tech giant as it will require a separate approach from the on-device design of Apple Intelligence and the Private Cloud Compute model. Notably, the company highlighted that user data accessed during the processing of the AI features will not leave the device at WWDC earlier this year. Citing people familiar with the matter, the report claimed that Apple and Baidu will have to solve these issues before Apple Intelligence can be released in China.

Apple Intelligence faces challenges in China: Baidu wants to scan user data - Softonic

The essential pillar of Apple Intelligence does not convince China While most of the world is already enjoying Apple Intelligence, there are two regions where Apple's artificial intelligence is still not available. One is the European Union, which, due to its regulations, has delayed its arrival, although we already have an official launch date in Europe. The other region is China, where Apple Intelligence faces challenges. According to The Information, the differences between Apple and Baidu, its local technology partner, go beyond technical issues, also affecting fundamental principles regarding privacy. Since China requires foreign companies to partner with a local entity to deploy artificial intelligence in China, Apple's goal is clear: adapt Baidu's capabilities to the quality and user experience standards of iOS. To achieve this, engineers from both companies are working to integrate the ERNIE 4.0 language model, presented by Baidu in October 2023. According to The Information, the model is not performing as expected, as it struggles to understand requests and respond adequately to common scenarios posed by users. Beyond the technical issues, which are not minor, the biggest challenge lies in the way user data is handled. While Apple advocates for privacy and local processing of information whenever possible, Baidu wants to retain the data generated by users during requests to its artificial intelligence. China represents the third most important market for Apple, and maintaining the competitiveness of iPhones there is of great importance. Apple has made the decision to collaborate with Baidu to ensure that its technology meets the requirements of the Chinese market. A move that makes sense given the difficulty of approving foreign artificial intelligence models in China, but it comes with both economic and strategic costs. The partnership with Baidu includes the use of the ERNIE 4.0 model, which Apple must pay for and also specifically adapt for the iPhone, implying an additional cost in development. The need to comply with Apple's strict privacy standards adds an extra layer of complexity. As reported in The Information, Apple is not willing to compromise its privacy defense, even if it means delays in the implementation of Apple Intelligence in the country. Although Apple has made concessions in other aspects to operate in the Chinese market -- such as storing data on local servers managed by Chinese companies -- the idea of allowing Baidu to freely access user data seems to be a line the company is not willing to cross. Time will tell how this situation is resolved, but what is clear is that Apple will continue to defend its approach to privacy, even in a market as delicate as China. We will see, with this, when Apple Intelligence will be available in the country. Meanwhile, and while we await its arrival in Europe, with Apple Intelligence, we are seeing how artificial intelligence can be integrated uniquely and naturally into our daily lives. An approach that, thanks to privacy, allows us to enjoy the power of AI in the applications we already know. An invisible AI that, however, will increasingly be present in what we do and how we do it.

Baidu confirmed as China Apple Intelligence model provider, but privacy concerns mount - 9to5Mac

Apple hopes to bring its Apple Intelligence suite of AI features to China in 2025, but the company has reportedly clashed with its partner Baidu over technical and privacy issues. Qianer Liu and Wayne Ma reporting for The Information: Engineers from Apple and Baidu are racing to adapt Baidu's large language models so they work well for iPhone users. But the models have struggled to understand prompts and provide accurate responses to common scenarios posed by iPhone users, according to one of the people with direct knowledge of the project. The report cites "two people familiar with the situation" who describe challenges that will need to be resolved before Apple Intelligence comes to Apple products in China. Additionally, Baidu reportedly wants to retain data from iPhone users who make AI-powered searches, which is the polar opposite of how Apple Intelligence and Private Cloud Compute are designed. While Apple often has to make concessions to accommodate the Chinese market, compromising on user privacy for the sake of AI features is hopefully a bridge too far. The challenge, of course, is keeping the iPhone competitive in Apple's third largest market, as the report notes. Apple is already treating China differently than the rest of the world by partnering with Baidu. The Information reports that Apple must pay Baidu a fee for using its AI "Ernie 4.0" model and covering the expense of adapting it for the iPhone. Baidu announced the model in October 2023. Here's a description from a company press release at the time: "ERNIE 4.0 has achieved a full upgrade with drastically improved performance in understanding, generation, reasoning, and memory," Robin Li, Co-founder, Chairman and CEO of Baidu, said at the event. "These four core capabilities form the foundation of AI-native applications and have now unleashed unlimited opportunities for new innovations." In his keynote, Li showcased the new ERNIE Bot powered by ERNIE 4.0 through extensive demonstrations of its four core AI capabilities. ERNIE Bot is able to "Understand" and provide answers to complex and even disorganized human requests, as well as interpreting hidden messages. ERNIE can also "Generate" a range of content, including text, images, and videos, in just a few minutes, based on one simple text prompt and image input. Li further demonstrated ERNIE Bot's ability to "Reason" by having it solve complex geometry problems. Lastly, ERNIE Bot's ability to "Memorize" and integrate incremental inputs was demonstrated by writing a short story and regularly adding new information as ERNIE was in process of writing the story. Why partner with Baidu in the first place? The Information explains that while foreign AI models aren't outright banned in China, approving these models for use isn't a priority for the Chinese government. The Apple and Baidu partnership, which was previously reported as likely happening by the Wall Street Journal, is reported as confirmed and explained in more detail in The Information report.

Apple facing hurdles in adapting Baidu AI models for China, The Information reports

(Reuters) - Apple and Baidu are working to add AI features to iPhones sold in China, but are facing hurdles that could hurt the tech giant's phone sales in the country, The Information reported on Wednesday. The companies, which are adapting Baidu's large language models for iPhone users, are grappling with issues such as the LLMs' understanding of prompts and accuracy in responding to common scenarios, according to the report. Apple and Baidu did not immediately respond to Reuters' requests for comment. Sales of iPhone in China slipped 0.3%, while rival Huawei posted a 42% surge in sales in the third quarter, research firm IDC had said in October, as competition intensifies in the world's largest smartphone market. Apple's long-awaited iPhone 16 launch in September had drawn scorn in China for its lack of artificial intelligence features. Also, Apple's privacy policies do not allow collection of data from iPhone users who make AI-related queries, but Baidu wants to save and analyze this data, according to the report. Baidu's most advanced model, Ernie 4.0, is being employed as the foundation for Apple's genAI services on the iPhone, Mac and iPad, The Information said, citing people familiar with the matter. Siri will also use Baidu's AI models, according to the report. (Reporting by Arsheeya Bajwa in Bengaluru; Editing by Sahal Muhammed)

Apple struggling to adapt Baidu's AI in China

STORY: Apple appears to be facing trouble with AI in China. Tech publication The Information says it's struggling to adapt Baidu's artificial intelligence models for its phones. The report says there are problems with the model's understanding of prompts, and its accuracy in responding to common scenarios. Elsewhere in the world, Apple uses tech from ChatGPT-maker OpenAI. But AI systems from U.S. firms are unavailable in China, leaving the market to local companies. Neither firm commented on the report. But if confirmed it would be bad news for Apple in a very tough market. Recent figures showed its phone sales slipping 0.3% in China in the third quarter - while local rival Huawei posted a 42% surge. And AI is a key battleground. Apple's launch of its latest iPhone 16 in September drew scorn in China for lacking the new technology. The Information says the tech giant's privacy policies also block collection of data from iPhone users who make AI-related queries - data that Baidu wants to save and analyze. The report says the Chinese firm's latest model - Ernie 4.0 - is the basis for the iPhone services.

Despite Baidu's Partnership, Apple Struggles To Launch Apple Intelligence In China Due To Privacy Concerns

Apple is vigorously working towards advancing its Apple Intelligence features and expanding them in more markets. It has faced significant challenges in China due to complicated regulations, technical difficulties, and cultural differences. While China focuses on data localization and makes it mandatory for companies to store user data in the country, Apple places great heed on privacy and on-device processing. To combat this issue, it was working with Baidu, which is huge in China's AI market, to bring its AI capabilities. Now, the collaboration seems to face a hiccup due to the company's growing concerns about privacy and control over user data. While Apple Intelligence is available to users in the U.S. and extends to many other regions, it is still to be established in China. The company has struggled in the country due to the restrictive measures in place that collide with Apple's core values. Because of this struggle, Apple partnered up with Baidu, a Chinese company that would help bring forth the features in the country. According to a new report by The Information, the company's plans to bring Apple Intelligence features this year to China seem to be grim as Apple and Baidu end up in disagreement over privacy and technical concerns. It is said that the news stems from two individuals who are familiar with the ongoing development of the plans and expressed their concerns over the need to resolve the matter promptly if the plan to roll out the features in China is to be carried out. It is stated that the most significant hurdle lies in Baidu's persistence in keeping the data of iPhone users when they do any AI-powered searches and Apple's core philosophy revolving around privacy and minimizing data collection clashing with it. The report also highlights issues with Baidu's models in understanding iPhone users' prompts. It claims: Engineers from Apple and Baidu are racing to adapt Baidu's large language models so they work well for iPhone users. But the models have struggled to understand prompts and provide accurate responses to common scenarios posed by iPhone users, according to one of the people with direct knowledge of the project. Apple continues to face strategic and ethical challenges and despite its willingness to adapt to the local expectations, some tensions have erupted in the company's attempts to bring Apple Intelligence features to China this year.

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Apple struggling to adapt Baidu's AI in China: report Apple and Baidu are working to add AI features to iPhones sold in China, but are facing hurdles that could hurt the tech giant's phone sales in the country, The Information reported on Wednesday. Julian Satterthwaite reports.