Apple in talks with ByteDance, Tencent for AI features of iPhones in China

For Apple iPhones sold in the Chinese mainland, AI features are not available now, as the company is still searching for an alternative to its supplier OpenAI, whose ChatGPT AI chatbot doesn't have the license to serve mainland customers.

Facing a decline in iPhone sales in China – its biggest market, Apple is reportedly in talks with multiple candidates from emerging AI firms to internet giants.

Previous reports suggested that the U.S. phonemaker was in talks with Chinese search engine leader Baidu to use its Ernie large model when mainland users ask their iPhone for features that are not pre-defined by Apple. But Reuters reported on Thursday that the talks stalled over whether Baidu can access iPhone users' data for model training.

The agency also reported citing anonymous sources that Apple is seeking AI partnership with ByteDance and Tencent, two Chinese internet giants that dominate short video and instant messaging markets, respectively. Both companies offer AI services – ByteDance's Doubao and Tencent's Hunyuan – with many features freely available to the public.

Zhipu AI, a smaller AI player in China, is also in talks with Apple, according to business media yicai.com.

Zhipu's unique advantage is a feature they call the "AutoGLM," which uses AI to read user interfaces like buttons and text boxes, allowing users to perform complex tasks with just text or voice commands. The philosophy of AutoGLM in a way aligns with Apple's own AI features.

The feature is now freely available for the public to use on web pages. The support for Android is limited to selected users, according to Zhipu's website. Zhipu also said they have been working with Honor, a major Chinese smartphone brand spun off from Huawei, to provide AutoGLM-based features.

Apple's hesitation on AI partnership contrasts with the strategies of other major players in China's smartphone market. South Korea's Samsung, Apple's main global competitor in smartphones, has partnered with Baidu for AI features. Domestic phonemakers like Huawei and Xiaomi have opted to develop their own AI models, since domestic models are easier to get government approval due to less cross-border data security concerns.

The sales of iPhone in China have declined in 2024, especially during the second quarter, when the company fell out of the top five phonemakers, according to market research firm IDC.

The competition of AI models in China is fierce as hundreds of government-approved models are vying for users, ranging from ordinary people to large enterprises.

The upcoming AI partnership could be a significant boost to both Apple and the potential partner.