Apple’s recent partnership with Chinese tech giant Alibaba to integrate artificial intelligence (AI) features into iPhones sold in China is set to put it at loggerheads with the White House and the U.S. Congress, as it raises questions about national security and data privacy concerns.
The deal, which hasn’t been publicly announced by Apple, was first confirmed by Alibaba’s Chairman, Joe Tsai, in February. The iPhone maker will use Alibaba’s AI models to power features on its phones made specifically for the Chinese market.
Apple partners with Alibaba to stay competitive in China
Last year, Apple introduced AI capabilities to the iPhone, with some of its Apple Intelligence features powered by its partner, OpenAI. However, OpenAI isn’t operational in China, meaning iPhone users in the country won’t be able to access the functionalities of the iPhone that users in the U.S would typically have access to.
China is reportedly Apple’s second-largest market, and it faces competition from local brands such as Huawei and Xiaomi. These brands already have advanced AI-powered features and enjoy growing national loyalty for their devices.
Reports also show that iPhone sales in China dropped to 15% last year, with CEO Tim Cook stating that iPhone sales have been better in markets where Apple Intelligence is functional. By integrating advanced AI functionalities through Alibaba, the American tech giant may be hoping to level the playing field and retain its relevance among Chinese consumers.
Privacy trade-offs and regulatory compliance raise U.S. concerns
However, Apple’s decision to localize AI capabilities in China is not merely a technological one. The iPhone maker also sought approval from Chinese regulators before the partnership with Alibaba could be finalized. This is not unrelated to how data will also be shared with the Chinese government, which mandates that foreign companies share user data and store it in the country.
With AI increasingly seen as a major economic and military asset, the U.S. has stepped up efforts to restrict China’s access to AI chips and tools. The collaboration with Alibaba runs counter to these efforts, drawing scrutiny from U.S. lawmakers and adding to the tensions between national interest and global business.
Apple has not issued a public response to the U.S. backlash. Industry analysts believe the company is trying to walk a tightrope that involves maintaining its privacy-centric brand image globally while adapting to strict Chinese regulations domestically, while courting the wrath of regulators in the U.S.
This is coming at a time when President Trump wants Apple to focus more on the U.S. and restrict external investments, as the president recently criticized Cook for building products in India.
Alibaba , on the other hand, has benefited significantly from the announcement. Investors see the deal as a major vote of confidence in Alibaba’s AI development capabilities in a competitive Chinese AI market that also has the likes of Deepseek.
As the U.S. government continues its bipartisan policy of restricting technological access to China, Apple may find itself in the crosshairs once again, not for its hardware innovation, but for the partners it chooses to power the intelligence behind its devices.
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