Apple’s A.I. Push Has a ‘Hidden Advantage’ Over Big Tech Rivals

In an era where data privacy concerns are paramount, Apple's closed-ecosystem distinction could offer a significant market advantage.

Apple WWDC 2024
Tim Cook said Apple’s “unique approach combines generative A.I. with a user’s personal context to deliver truly helpful intelligence.” NIC COURY/AFP via Getty Images

At the Apple (AAPL) Worldwide Developers Conference (WWDC) earlier this month, the iPhone maker introduced Apple Intelligence, marking a milestone in the tech giant’s foray into generative A.I. While Apple’s history with A.I. began with the introduction of its digital assistant, Siri, in 2011, it has since lagged behind competitors like Amazon (AMZN) and Google (GOOGL). With the launch of Apple Intelligence and a ChatGPT integration in partnership with OpenAI, the company now aims to reshape the “conscious A.I.” market.

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Apple Intelligence promises a unique integration of A.I. capabilities into existing Apple devices, with a focus on user privacy. Apple has enforced strict data protection policies for GPT features requiring cloud processing to maintain user trust and security. The company claims users can control when ChatGPT is used and will be prompted before any information is shared.

“Our unique approach combines generative A.I. with a user’s personal context to deliver truly helpful intelligence. And it can access that information in a completely private and secure way to help users do the things that matter most to them,” Apple CEO Tim Cook at WWDC 2024. 

How Apple’s A.I. push stacks up against Amazon, Google and Samsung

Apple’s approach addresses some concerns around the always-on listening capabilities in A.I. products such as Amazon Alexa and Google Assistant. Last year, Amazon upgraded its Alexa and Echo lines with generative A.I. for enhancing voice assistant features using a custom-built large language model (LLM). The “generative AI-powered Alexa” can now continue conversations without needing to hear its wake word repeatedly. The feature raised concerns that the device might be listening to entire conversations. 

In an era where data privacy concerns are paramount, Apple’s closed-ecosystem distinction could offer a significant market advantage. Apple’s focus on data privacy and on-device processing mirrors Samsung’s A.I. approach, which also ensures sensitive information remains with the user. In January, Samsung (SSNLF) announced that its new smartphones would utilize Google’s AI model, incorporating proprietary LLMs and Google Gemini to offer flexible A.I. task handling.

“The hidden advantage of data processing on-device is that the processing time will be faster and experiences will be even more native. Two birds with one stone,” Mohit Kumar, founder and CEO of Ultrahuman, a smart device manufacturer, told Observer. “Given growing concerns around user data being used for training A.I. models, Apple could potentially emerge as a premium user A.I. experience provider in this mass category.”

“Apple is really flexing their native device control muscle. The narrative shift on making this a native play is a game changer for device manufacturers,” added Kumar. “We will probably see a boom in IoT and Edge ML companies as well.”

Apple Intelligence’s rollout will be gradual—starting with the iPhone 15 Pro and the upcoming iPhone 16, due to higher processing capability requirements. This phased introduction may limit immediate adoption but sets the stage for broader integration across Apple’s product line.

Why Apple chooses OpenAI over building out its own A.I. effort

The launch of OpenAI’s ChatGPT in late 2022 marked a pivotal moment in A.I., prompting Apple to enhance its AI strategy. Apple has heavily invested in A.I. research and development, with reports indicating that small teams within the company’s AI and software engineering divisions were developing a framework, dubbed Ajax, to rival ChatGPT.

Despite these efforts, Apple recognized that OpenAI and Google led in chatbot technology, hence seeking out a strategic partnership with OpenAI. Through this collaboration, Apple can offer robust A.I. services while minimizing the risks associated with developing its own chatbot. Moreover, the upcoming iOS and iPadOS versions—known internally as “Crystal”—are packed with A.I. features, thanks to the efforts of software chief Craig Federighi and services head Eddy Cue.

However, Apple’s partnership with OpenAI has drawn ire from Elon Musk, an original founder of the A.I. lab who left in 2018 and has maintained a contentious relationship with the company ever since. 

It’s patently absurd that Apple isn’t smart enough to make their own A.I., yet is somehow capable of ensuring that OpenAI will protect your security and privacy!” Musk wrote on X. “Apple has no clue what’s actually going on once they hand your data over to OpenAI. They’re selling you down the river.” The tech billionaire also said he would ban Apple devices at his companies if the iPhone maker integrates OpenAI at the operating system level. 

“Apple’s collaboration with OpenAI raises questions about data-sharing agreements in place, particularly given Apple’s strong emphasis on user privacy,” Daniel van der Woude, product lead at Nuklai, a big data company, told Observer. “Although users must opt in to use GPT services, it’s possible that Apple will retain this data to develop its own large language models eventually.”

Apple’s recent move aims to convince investors it can leverage A.I. to boost growth. Earlier this year, Microsoft surpassed Apple as the world’s most valuable company by market value. Its shares surged nearly 30 percent over the past year, partly thanks to heavy investments in OpenAI, while Apple shares rose less than 10 percent. 

As the A.I. landscape evolves, Apple’s innovation and strategic partnerships will be crucial in maintaining its competitive position. For consumers, the prospect of a personalized, intuitive and secure user experience makes Apple Intelligence a significant development in the tech industry. Consumers and competitors alike will closely watch how Apple delivers its A.I. promises.

Apple’s A.I. Push Has a ‘Hidden Advantage’ Over Big Tech Rivals