Apple picks Alibaba to launch AI features in China

CNN

17-02-2025

Apple will work with Chinese tech giant Alibaba to roll out AI services in the world's biggest market for mobile phones, in a move that removes months of uncertainty for the Cupertino-based firm.
'Apple has been very selective. They talked to a number of companies in China, and in the end, they choose to do business with us. They want to use our AI to power their phones,' Joe Tsai, chairman of Alibaba, said on Thursday during a speech at the World Governments Summit in Dubai.
He did not provide further details like a timeline for the release or whether Alibaba will be the exclusive partner.
News of the partnership was first reported by The Information. It said Apple also considered other Chinese AI firms like DeepSeek, Baidu, ByteDance and Tencent before ultimately selecting Alibaba.
CNN has reached out to Apple and Alibaba for further comment.
Due to local compliance issues and regulatory concerns, Apple has so far only been able to release its AI service, Apple Intelligence, to limited markets, including the US, Canda, UK and Australia. The Chinese government mandates that foreign AI operators need to partner with a local company and obtain regulatory approval.
Apple has been losing market share in China to domestic rivals such as Huawei and Vivo. Lucas Zhong, research analyst at Canalys, a market research firm, said while AI services are expected to help Apple gain users in China, challenges remain.
'Apple faces a much more challenging competitive landscape in China, especially amid Huawei's strong resurgence. Relying solely on AI services may not be enough to turn the tide,' he said.
Apple had dominated China's high-end smartphone market for years before Huawei rose through the ranks and began posing a credible challenge. But in 2019, US President Donald Trump moved to impose trade restrictions on Huawei.
Initially, those curbs hit Huawei's business hard. But eventually, they incentivized Huawei to adapt and innovate, which culminated at the launch of Mate 60 Pro in 2023 that triggered an US government's investigation. Huawei's transformation, coupled with strong patriotic sentiment among some Chinese people, has powered its rise.
Last year, Huawei, posted a market share of 16% in China, overtaking Apple's 15%, according to Canalys data. In 2023, Apple was the top mobile phone seller in the country with 19% of market share. Huawei trailed behind at 12%.
The confirmed partnership with Apple has boosted investors' confidence in Alibaba. Its Hong Kong-listed shares has surged by more than 40% since hitting a two-year low in January.
Shortly after Chinese startup DeepSeek unveiled an AI model in January that stunned Wall Street, Alibaba unveiled its latest version of its Qwen AI model, saying it was better than its competitor's R1 model.
Speaking at the same event on Thursday via video, Elon Musk, said the next generation of his company xAI's large language model, Grok 3, would be released in one to two weeks, touting it as the best AI chatbot on the market.
'In the tests that we've done thus far, Grok 3 is outperforming anything that's been released, that we're aware of,' the tech mogul said.
Musk founded xAI with the goal of challenging OpenAI, the company he co-founded, as well as other AI giants like Google.
Hassan Tayir contributed research.