By Zheng Yijiu

After a year of rigorous testing and negotiations, Apple has selected Alibaba as its AI partner in the Chinese market, according to The Information. This decision, though unexpected, is rooted in strategic necessity. For Apple, renowned for its meticulous control, collaborating with a local Chinese company to develop AI represents a significant shift from its global strategy. However, with its Chinese market share declining and local brands like Huawei surging, this adjustment is crucial. Apple's selection process, spanning from Baidu to ByteDance, Tencent, DeepSeek, and ultimately Alibaba, underscores a comprehensive evaluation of domestic AI capabilities. Alibaba's choice is not solely based on technical merit but also reflects Apple's strategic considerations encompassing technology, data privacy, and market dynamics.

Source: Reuters

Behind this decision lies a deeper concern for Apple. In the intensifying global AI race, Apple's absence in the Chinese AI landscape highlights its market challenges. Conversely, Alibaba, despite its robust AI technology, lacks a direct platform to showcase it to consumers. This partnership thus emerges as a mutual rescue mission, with Apple leveraging Alibaba to launch Apple Intelligence, while Alibaba gains a direct route to consumers for its AI offerings.

01 Apple's Dilemma in China

Apple's hesitation in choosing an AI partner reveals a broader structural issue in the Chinese market. The latest financial reports indicate that Apple's revenue in Greater China has declined year-on-year for six consecutive quarters, with nine of the past twelve quarters showing negative growth. During the latest earnings call, CEO Tim Cook attributed this decline, in part, to the delay in launching Apple Intelligence in China. However, the European market's outperformance over the US, despite Apple Intelligence's unavailability except in the UK, suggests a deeper structural problem. With OPPO, vivo, and Xiaomi actively deploying AI features, Apple struggles to differentiate without Apple Intelligence, mirroring Tesla's plight with delayed Full Self-Driving (FSD) capabilities. Moreover, the shift in domestic brand perception poses a significant threat to Apple's premium positioning as Chinese consumers become less tolerant of iPhone's brand premium. Thus, expediting Apple Intelligence's launch is crucial for maintaining Apple's high-end status in China.

Apple's FY2025 Q1 Financial Report

Apple Intelligence

Therefore, the AI collaboration with Alibaba is a tactical adjustment rather than a strategic reversal of Apple's market decline.

02 Alibaba's Journey from Periphery to Center

Apple's choice of Alibaba underscores its impatience with Baidu and the need to accelerate Apple Intelligence's launch. While Baidu and its Wenxin Yiyan model were initially favored, they failed to meet Apple's stringent standards for real-world iPhone scenarios. In contrast, Alibaba's refined Tongyi Qianwen model excels. Ranked highly on the Chatbot Arena, Tongyi Qianwen's e-commerce data-based training grants it a unique understanding of consumer behavior, aligning perfectly with iPhone users' AI needs. Furthermore, Alibaba's proprietary dataset solution balances Apple's global privacy standards with China's data security requirements, a strategic necessity for Apple. Alibaba's cloud computing and large-scale service capabilities also provide a robust backend for supporting hundreds of millions of iPhone users, a crucial consideration for Apple.

Source: Chatbot Arena LLM Leaderboard

Beyond technical cooperation, this partnership redefines Alibaba's industry position. Amidst fierce competition from ByteDance, Kimi, and DeepSeek, securing Apple's order not only validates Alibaba's AI prowess but also reestablishes it as a large model leader. This collaboration will significantly boost Tongyi Qianwen's user base, providing invaluable feedback and data for refining its AI applications. Jack Ma's prediction that AI will revolutionize the next 20 years resonates with this strategic move. By partnering with Apple, Alibaba demonstrates the indispensable value of technology in shaping the future.

Source: Internet

Source: Internet

For Alibaba, partnering with Apple presents an exceptional opportunity to showcase its AI capabilities to consumers. In the AI large model race, consumer adoption ultimately defines advancement, making this collaboration a strategic triumph.