Market AnalysisJul 16, 20265 Min

Apple Intelligence finally clears the ‘China’ hurdle by choosing Alibaba, Baidu as partners

On Wednesday, US tech giant Apple Inc. announced that Apple Intelligence has officially cleared a critical regulatory hurdle by securing filing approval from the Cyberspace Administration of China for generative AI services.

This paves the way for the launch of Apple Intelligence in mainland China two years after the company first introduced its AI features.

Just when investors were trying to decode this surprising approval, Chinese tech company Alibaba confirmed to various media outlets that its Qwen large language model will be integrated into Apple Intelligence to provide text and image understanding services for Chinese users across iOS, iPadOS, and macOS.

Simultaneously, Baidu also confirmed that it will develop AI-powered search capabilities and upgrade the Chinese version of Siri for Apple.

Notably, generative AI services in China must receive regulatory clearance before being made available to the public.

Apple’s AI tools for writing, generating images, summarizing notifications and creating custom emojis were long stuck in the Chinese approval process and further development required Apple to work with outside partners.

This is where Alibaba and Baidu came to Apple’s rescue. Apple’s AI features in China will now incorporate capabilities from Alibaba’s Qwen large language model and Baidu’s AI technologies.

What does it mean for Apple users in China?

In the upcoming system updates, Chinese users of iPhone, iPad, Mac, and Apple Vision Pro will be able to directly invoke Alibaba Qwen’s text generation, image understanding, and content creation capabilities within Apple’s environment, eliminating the need to switch between different apps.

Similarly, search services for the China’s version of Apple Intelligence will be backed by Baidu, the same way as the US version of the features taps into services from Alphabet Inc.’s Google and OpenAI.

Alibaba, Baidu shares surge

Shares of both Alibaba Group and Baidu climbed on Thursday after announcing partnership with Apple for its Apple Intelligence services in China.

Alibaba’s ADRs jumped as much as 8% in after-hours trading in the US, while Hong Kong-listed shares of the company gained as much as 5.6% on Thursday. Baidu’s Hong Kong-listed shares also gained 4%.

The partnership is a win-win for both the parties as the rollout of Apple Intelligence would strengthen Apple’s position in China where it was lagging behind domestic rivals Huawei and Xiaomi in terms of AI features. Meanwhile, it will give massive reach to the AI technologies of Alibaba and Baidu by giving them direct access to millions of iPhone, iPad, and Mac users in China.