By Zheng Yijiu

After nearly a year of rigorous testing and negotiations, Apple has finally confirmed Alibaba as its AI partner in the Chinese market, according to The Information. This decision, while unexpected, is rooted in practicality. For Apple, renowned for its centralized control, collaborating with a local Chinese company to develop AI features marks a significant departure from its globally unified strategy. However, given Apple's declining market share in China and the surge of domestic brands like Huawei, such an adjustment is crucial. From Baidu to ByteDance, Tencent, DeepSeek, and ultimately Alibaba, Apple's selection process reflects a thorough evaluation of the current strength of domestic AI large models. Alibaba's choice is not merely a testament to its technical prowess but also a strategic decision by Apple, balancing technology, data privacy, and market factors.

Image Source: Reuters

Behind this decision lies a deeper concern for Apple. In the intensifying global AI competition, Apple's absence in China's AI landscape underscores its market decline. Meanwhile, Alibaba, despite its impressive AI technology, lacks platforms to showcase these capabilities to consumers.

This partnership, therefore, serves as a mutual rescue mission, addressing each party's challenges. Apple leverages Alibaba to launch Apple Intelligence, while Alibaba finds a new avenue to bring its AI to the consumer market.

01 Apple's Dilemma

Apple's hesitation in choosing an AI partner stems from deeper structural issues in the Chinese market, extending beyond AI alone. The latest financial report data from December last year shows that Apple's revenue in Greater China has declined year-on-year for six consecutive quarters, with nine out of the past 12 quarters experiencing negative growth. During the latest earnings call, Apple CEO Tim Cook attributed this decline, in part, to the delayed launch of Apple Intelligence in China. However, the fact that the European market outpaced the US in growth despite Apple Intelligence's limited rollout (excluding the UK) indicates a more complex, independent issue at play in China.

Apple's Fiscal Q1 2025 Earnings Report

Apple's predicament in China goes beyond features and innovation; it involves a shift in brand perception. As domestic brands strengthen, consumers' tolerance for iPhone's premium pricing diminishes. Launching Apple Intelligence swiftly is not just a trend-following move for Apple but critical to maintaining its high-end brand position in China.

Apple Intelligence

Thus, the AI collaboration with Alibaba is a tactical adjustment rather than a strategic turnaround to reverse Apple's decline.

02 From the Periphery to the Center

Alibaba Needs to Redefine Its AI Narrative. Apple's selection of Alibaba as its AI partner signifies impatience with Baidu and a renewed push for Apple Intelligence. While Baidu and its Wenxin Yiyan model were initially favored, they failed to meet Apple's stringent standards for real-world iPhone scenarios after a year of adaptation. In contrast, Alibaba's refined Tongyi Qianwen model excels. Its performance ranks among the top on the Chatbot Arena leaderboard, and its training on vast e-commerce data provides unique insights into user behavior and daily needs, aligning well with iPhone users' AI expectations.

Image Source: Chatbot Arena LLM Leaderboard

Moreover, Alibaba's proprietary dataset solution addresses both Apple's global privacy standards and China's data security requirements, a strategic balance for Apple. With strengths in cloud computing and large-scale services, Alibaba ensures reliable support for hundreds of millions of iPhone users' AI needs. For Alibaba, this cooperation transcends technical collaboration; it's a pivotal breakthrough amid fierce competition among domestic large models. Winning this order from Apple not only validates Alibaba's AI capabilities but also reaffirms its leadership in the large model field.

Image Source: Internet

Notably, this partnership will significantly boost Tongyi Qianwen's user base. While the model excels in tests, its consumer product lacks refinement. Pre-installing Tongyi Qianwen's AI functions on iPhones guarantees a stable user base of tens of millions, unattainable through conventional marketing. This will enrich Alibaba's user feedback and data, aiding in refining AI super applications and achieving a breakthrough in consumer AI applications.

Last year, Jack Ma emphasized, "The changes the AI era will bring in the next 20 years will surpass imagination. AI will transform everything, but technology alone doesn't decide everything. What we do today that adds value and difference determines the future." With Alibaba's AI securing Apple, will Jack Ma now emphasize the irreplaceable value of technology?

Image Source: Internet

For Alibaba, partnering with Apple is a prime opportunity to showcase its technical prowess and bring AI closer to consumers. In the AI large model race, "advanced vs. backward" is meaningless without consumer adoption. Ultimately, consumer choice determines who represents the advanced.