Apple-Alibaba AI Deal Scrutinised

US lawmakers and the Trump administration are examining Apple's potential deal with Alibaba to integrate AI features into iPhones sold in China. This partnership aims to introduce Apple Intelligence to the Chinese market, where OpenAI's ChatGPT is unavailable. However, officials are concerned that the deal could bolster China's AI capabilities, compromise user data, and deepen Apple's exposure to Chinese censorship laws. Concerns have been raised about data privacy, censorship, and national security risks.

Apple executives have reportedly met with White House and House Select Committee officials to address these concerns, but have struggled to provide satisfactory answers regarding data sharing and legal commitments. Representative Raja Krishnamoorthi has called the deal "extremely disturbing," highlighting Alibaba's ties to the Chinese Communist Party. The scrutiny comes amid an ongoing AI race between the US and China, with fears that the deal could give Chinese companies an advantage. Alternative partners such as Baidu, DeepSeek, and Tencent were also considered by Apple.

If Apple fails to secure the AI deal with a local Chinese tech firm, it risks losing its Chinese customers to local brands like Xiaomi and Huawei. These brands have already established potent AI capabilities on their devices, and without a similar offering, Apple could see a significant shift in its customer base in China.