Apple in trouble again in China

Photo: The New York Times

The U.S. government and members of Congress have recently been reviewing Apple’s deal with Alibaba, concerned that Apple’s partnership with a Chinese company could help rivals improve their AI capabilities, expand censored chatbots, and make Apple vulnerable to censorship and data-sharing laws in China.

Three years ago, Apple was pressured by the U.S. government to abandon a deal to buy memory chips from Chinese manufacturer YMTC. More recently, the company has been hit by tariffs on goods made in China, threatening its global profits.

If forced to abandon the Alibaba deal, the damage to Apple would be more severe, since China accounts for nearly 20% of its global revenue. Without Alibaba’s support, the iPhone could fall behind domestic rivals like Huawei and Xiaomi.

During a meeting in March, White House officials and the bipartisan China Commission asked Apple questions about the terms of the partnership, what data would be shared, and whether the company had signed a legal commitment with China. Many of the questions Apple could not answer.

The US increasingly views AI as a tool with potential military uses, with the technology capable of coordinating attacks and operating drones. As a result, the US is looking to limit Beijing’s access to AI, including cutting off its ability to produce and buy AI chips. Some in the Trump administration have even proposed blacklisting Alibaba and other Chinese AI companies from doing business with US companies.

Representative Raja Krishnamoorthi, ranking member of the House Intelligence Committee, said he was “very concerned about Apple’s lack of transparency.” He said Alibaba is a prime example of China’s “civil-military fusion” strategy, and partnering with them could help the company collect more data to train its AI models, while Apple ignores the privacy of Chinese users.

Apple, the White House and Alibaba all declined to comment. Alibaba Chairman Joe Tsai confirmed the partnership in February.

US lawmakers worry that if Apple leads the way, other US companies will follow suit, helping to strengthen China’s AI power. Companies like Baidu and ByteDance could then use the improved technology to aid the Chinese military.

Greg Allen, director of the Wadhwani Center for AI at CSIS, said Apple’s support for Alibaba runs counter to bilateral efforts to slow Beijing’s AI progress. “The United States is in an AI race with China. We can’t let American companies fuel our competitors,” he said.

In addition to the issue of cooperation with China, CEO Tim Cook also received criticism from former President Trump for moving production lines to India. During a recent trip to the Middle East, Mr. Trump told Cook that he “doesn’t care about manufacturing in India. We want you to manufacture in the United States.”

Last year, Apple introduced Apple Intelligence, a new set of AI features for the iPhone that includes notification summaries, email dictation, and a smarter Siri assistant. The company partnered with OpenAI to integrate ChatGPT for iPhone users in the US. But since OpenAI doesn’t operate in China, Apple needed a local partner to provide a comparable experience. After negotiating with several companies, Apple chose Alibaba and applied for an AI license from the Chinese government.

It is unclear when the AI ​​features will be rolled out in China, but Cook did say that iPhone sales are better in markets where Apple Intelligence is available.

The US Congress is particularly concerned about Apple having to seek Beijing’s permission in an area that is shaping its future, fearing that Apple will have to make concessions that will inadvertently put it under the control of the Chinese government.

If the partnership with Alibaba fails, Apple could lose a major iPhone distribution channel in China, said Richard Kramer, an expert at Arete Research. Meanwhile, Chinese competitors are actively integrating AI into their devices, making the iPhone experience less competitive.

“Users may still buy iPhones, but the experience will no longer be superior,” he said.

Source: https://znews.vn/apple-lai-gap-rac-roi-o-trung-quoc-post1553980.html