Apple Intelligence – Chinese Elephants

The problem is much worse than ChatGPT. 

• A hyperbolic keynote and a $300bn rally later and no one has yet asked how Apple will tackle the problem of rolling out its shiny new AI service in China as the architecture of Apple Intelligence runs completely contrary to the way China likes to do things.
• Apple Intelligence is constructed from three main building blocks.
• First, a run-time with small language models that executes on-device, second a vertically integrated and completely closed server that runs large requests that remain private and third a link to ChatGPT which will be expanded to all of the others pretty soon.
• Those who have picked up on the fact that ChatGPT is the only 3^rd party LLM supported by Apple Intelligence were quick to point out that ChatGPT is not available in China but missed the elephant in the room.
• The ChatGPT problem is by far the easiest to fix as the API can easily be pointed at Baidu’s ERNIE bot or any of its competitors which I am certain Apple will quickly enable.
• What is far more difficult is how China will view Privacy Cloud Compute and the on-device runtime.
• Privacy Cloud Compute is a completely closed system that executes generative AI tasks on behalf of the user when there is not enough processing on the device and then erases all traces of the request after it has been executed.
• Apple Intelligence also creates a semantic graph of the user’s data and his or her preferences which is then used to prime generative AI requests both on and off the device to make them more relevant and useful.
• All of this of course is fully encrypted and secure such that Apple has no idea what any of these semantic graphs look like and no idea of what is going on the Privacy Cloud Compute server.
• This is where the real problems with the Chinese regulators are going to occur as there are already very strict regulations around AI in China and I suspect that the regulator is going to object to all of this.
• The regulator will want hard guarantees that all of Apple’s systems will not produce any content that is not in line with Chinese values which will be very difficult to provide given how Apple has designed its system.
• Apple will also have to build a server in China and provide the regulator access to it on demand which also runs contrary to the design of Privacy Cloud Compute.
• Consequently, Apple will either be forced into some messy compromise or end up not running the Apple Intelligence service in China at all.
• I suspect that the latter of these two outcomes is the most likely but given the pressure that Apple is already under in China, I am not convinced this is going to hurt its outlook in China very much.
• This is another sign of how increasingly incompatible Chinese and Western business practices are becoming and will only serve to hasten the bifurcation of the Internet that increasingly looks inevitable.
• This bifurcation of the global network inevitably means less growth for all of the technology sector in the long term.