"Apple still faces difficulties in interpreting user prompts and responding to common scenarios during the optimization process of the ERNIE Bot large model."

@TechNews Original

Apple encounters obstacles in adjusting Baidu's AI large model, potentially affecting iPhone sales? On December 5, according to foreign tech media, Apple may cooperate with Baidu to actively explore the introduction of AI functionality for Chinese users through Baidu's language large model.

Apple previously launched the highly anticipated iPhone 16, but the Chinese version lacked AI functionality upon its initial release, causing dissatisfaction among Chinese users. Apple CEO Tim Cook previously stated that starting from April 2025, Apple AI would introduce more languages and features. This implies that Chinese iPhone users may soon have access to Apple AI as early as April next year.

According to reports, Apple plans to use ERNIE Bot 4.0 to provide generative AI services for its iPhone, Mac, and iPad devices. Additionally, informed sources revealed that the two companies are not only collaborating on deploying small models on devices like the iPhone but also on large models running in the cloud. Siri will also utilize Baidu's AI model to provide better search results.

However, the cooperation between the two parties has encountered obstacles. "The Information" learned from informed sources that ERNIE Bot 4.0 is encountering difficulties in understanding prompts and accurately responding to common scenarios raised by iPhone users.

Furthermore, Baidu and Apple have disagreements regarding data privacy. Baidu hopes to retain data from iPhone users conducting AI searches for analysis, which clearly conflicts with Apple's privacy policy. According to informed sources, Apple has paid up to $10 billion to use Baidu's AI model.

The market anticipates that these obstacles may negatively impact Apple's iPhone sales in the Chinese market. However, neither Baidu nor Apple has responded to the cooperation-related news.

01

Rumors of Cooperation Have Circulated for a Long Time

Using localized language large models in mainland China is not new. Rumors about the cooperation between Baidu and Apple have been circulating in the market for some time.

As early as March this year, "Science and Technology Daily" learned from informed sources that Baidu would provide AI functionality for the upcoming Chinese versions of the iPhone 16, Mac system, and iOS 18, with Apple planning to charge via API interfaces. Additionally, Apple had negotiations with Alibaba and another domestic large model company but ultimately chose Baidu to provide services. Baidu's share price surged on that day, with intraday gains exceeding 6% and closing gains nearing 3%.

However, soon after, sources close to Apple denied this claim, stating that no cooperation had been reached between the two parties.

In June this year, according to "The Wall Street Journal," Apple had been in contact with Baidu, Alibaba, and startup Baichuan but had not reached any agreements. Now, it seems settled that Baidu will partner with Apple.

Industry insiders point out that cooperating with domestic large model enterprises can not only help Apple comply with relevant regulations and avoid potential legal risks when providing AI services but also better adapt to the characteristics and needs of the Chinese market.

"The Information" reported that Apple and Baidu engineers are working hard to adjust Baidu's large language model. However, the two parties have encountered many issues when adjusting the ERNIE Bot large model. A source directly familiar with the project stated that these models still have difficulties in understanding user prompts and accurately responding to common scenarios.

For example, a Chinese iPhone user might ask Apple Intelligence to recommend a restaurant. Baidu's model might provide an answer solely based on training data, whereas Apple prefers to offer more personalized answers based on the user's downloaded applications, messaging history, and other activities.

02

Not Leading by a Wide Margin

Baidu was one of the earliest adopters of large models. Last August, ERNIE Bot was opened to the public. In October, the ERNIE Bot 4.0 version was released, with Robin Li claiming that the model was "no less impressive" than GPT-4 in overall performance. As of early November, the daily average call volume of Baidu's ERNIE Bot large model had exceeded 1.5 billion, a roughly 30-fold increase from the 50 million disclosed a year ago.

At Baidu World 2024, Baidu's Chief Technology Officer Wang Haifeng revealed that "the user base of ERNIE Bot has reached 430 million."

However, according to "AI Product Rankings," the top-ranked app in terms of cumulative downloads of native Chinese AI applications from January to October 2024 was Doubao, with 108 million downloads, followed by Wenxiaoyan (formerly ERNIE Bot) in second place with 22.6 million downloads. Although Doubao is owned by ByteDance and enjoys exclusive promotion rights on Douyin, the gap between the two is significant.

Furthermore, Baidu founder Robin Li stated at Baidu World 2024 that "the biggest change in the AI industry over the past 24 months is that large models have largely eliminated hallucinations." However, according to "New Knowledge Research Institute," when asked about the advantages of Toronto as the capital of Canada, ERNIE Bot's response mentioned that Toronto, as the capital, could better showcase Canada's national features. However, Toronto is not the capital of Canada.

It is evident that ERNIE Bot is far from achieving the level claimed by Robin Li.

Apple has introduced the AI large model GPT-4o, which will be integrated into Siri. In mainland China, Apple uses Baidu's ERNIE Bot 4.0. The collaboration with Baidu aims to enhance product competitiveness and attract more Chinese consumers through Apple Intelligence. However, if these issues cannot be resolved, they may negatively impact Apple's sales.

Informed sources revealed that Apple needs to pay Baidu for using ERNIE Bot 4.0 and also bear the cost of modifying the model for the iPhone.

Baidu's latest financial report shows that online advertising revenue declined by 4% year-on-year in the third quarter. Additionally, the growth rate of the advertising business has declined for three consecutive quarters, with negative growth in the last two quarters. Operating profit also decreased by 19% year-on-year. On the day the financial report was disclosed, Baidu's American depositary shares suffered a significant drop, with an intraday decline of over 7%.