Apple faces regulatory challenges in China

Apple's AI ambitions face regulatory hurdles

by Faruk Imamovic
Apple faces regulatory challenges in China
© Getty Images/Drew Angerer

Apple recently presented its latest developments in the field of artificial intelligence. Under the name "Apple Intelligence", innovative AI features were introduced that are intended to enrich the user experience of iPhone owners.

Particularly noteworthy is the announced, albeit limited, integration of ChatGPT into Siri. These innovations are part of Apple's strategy to regain a foothold in the highly competitive technology market. With giants such as Microsoft, Google, Meta and Samsung already having established firm positions in the AI ​​sector, Apple is under pressure.

But The company is facing significant obstacles in China. China was one of the first countries to introduce strict regulations on the use of generative AI technologies. The Cyberspace Administration of China requires companies to get approval before using new AI models, with only models of Chinese origin approved until March.

Difficult market conditions and the search for a partner

Apple has experienced drastic declines in smartphone sales in China. According to market research firm IDC, iPhone sales fell by an impressive 10% in the first quarter of this year, largely due to waning interest in China.

As Apple's second-largest market, China plays a crucial role for the company, but nationalism, a weak economy and increasing competition are making things difficult. So far, Apple has not been able to reach an agreement with a Chinese AI company, although time is running out.

The expected iPhone launch in September is fast approaching, and without the ability to offer full AI capabilities, the company could face resistance from Chinese consumers, who expect their premium smartphones to be equipped with the latest AI features and may be hesitant to spend large sums on a device that does not meet these expectations.

Regulatory challenges in the EU

Not only in China, but also in the European Union, Apple is facing regulatory challenges. The uncertainties created by the Digital Markets Act (DMA) may prevent certain AI features, such as iPhone mirroring and SharePlay screen sharing, from being introduced in the EU this year.

Apple has expressed concerns that the DMA's interoperability requirements could compromise the integrity of its products, posing risks to users' privacy and data security. In China, however, the competition continues its success stories.

Huawei recorded 70% growth in smartphone sales in the first quarter. If Apple does not find a solution by autumn, Chinese consumers may feel disadvantaged and wait to purchase until they can have the full AI experience with an Apple product.

Apple China