Apple AAPL -1.91%decrease; red down pointing triangle joined the AI arms race, saying Monday it plans to bring a more personalized version of artificial intelligence to its 2.2 billion device users—including striking a deal with ChatGPT-maker OpenAI.
The new AI system, which it called “Apple Intelligence,” offered a preview to what many consider to be the holy grail of AI, a voice assistant empowered with enough personal user information to meaningfully help complete an array of tasks. Apple has partnered with OpenAI, and its ChatGPT, for some new AI functions, such as answering more complex queries or composing messages, capabilities that Apple’s AI can’t handle.
The announcement comes after the iPhone maker saw its market value stagnate compared with rivals that were quicker to incorporate generative artificial intelligence into their core products.
“We think Apple Intelligence is going to be indispensable to the products that already play such an integral role in our lives,” Chief Executive Tim Cook said in the presentation.
At its Worldwide Developers Conference, which will run throughout the week, Apple said its new software will retrieve information from across apps and scan personal information to help users proofread text, call up photographs of specific family members or gauge traffic patterns ahead of an atypical commute. Users can create images and emojis and even convert rough sketches into polished diagrams.
An updated Siri will be able to better understand natural language, process contextual information and take action inside apps. Developers can use new tools to take advantage of the AI systems, a prospect that has excited some investors who have hoped that Apple could leverage its App Store to unveil new products. Most of these new Apple capabilities will be available later this year.
For certain complex Siri requests, Apple will surface a prompt to ask if the user wants to connect with ChatGPT to get a better answer. Apple is also allowing ChatGPT to connect with other areas of the operating system, such as using the AI to help with composing text. Apple said it gives users the ability to control when and if they want to use ChatGPT.
Apple also announced the ability to connect to external AIs and said that it planned to add support for additional artificial-intelligence systems in the future. The company has held talks with Cohere and Alphabet’s Google, the Journal has reported.
OpenAI CEO Sam Altman, who was on hand at the Apple event but didn’t speak during the livestreamed broadcast, said that he was grateful for the opportunity to integrate ChatGPT into Apple’s devices. “[T]hink you will really like it,” he said on X. Apple said the ChatGPT-based functions will be available later this year. An OpenAI spokesman declined to comment about the terms of the partnership, as did Apple representatives.
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Privacy is at the heart of Apple’s new AI capabilities, a feature that could further lock users into its ecosystem. Most processing will be done on a device instead of shipping to the servers in the cloud. But the company said for running larger AI models Apple will keep it private by running its own servers with what it calls Private Cloud Compute. It will only send data relevant to the task to these servers. The data isn’t stored or accessible by Apple for further training, the company said.
Elon Musk, who is developing a rival AI system dubbed xAI, said that if Apple integrates OpenAI “at the OS level,” he plans to ban Apple devices at his companies. “That is an unacceptable security violation,” he said on X.
ChatGPT queries from Apple devices will be routed to OpenAI servers, but user information won’t be shared with OpenAI, and the startup won’t be able to identify the queries from specific Apple users. Apple will use a version of ChatGPT that is available free elsewhere online, but those with premium ChatGPT subscriptions will be able to link their accounts.
For Apple, the past year has been characterized by challenges including falling sales in China and regulatory scrutiny from a U.S. antitrust lawsuit and a new European law, both of which take aim at how it manages third-party software.
Investors hoped Monday’s announcements would propel a new rally. The company’s shares fell by almost 2% Monday.
“It’s important for them to start showing progress,” said Charles Rinehart, chief investment officer at Johnson Investment Counsel, an Apple investor.
Some AI features that Apple showcased Monday have been available in other software for some time, including auto-reply for emails and photo editing that can remove distracting background images including people. Other functions include the capability to re-create the handwriting style of a user on iPads, allowing users to draw equations that the software can answer. In the Safari web browser, Apple will be using AI in a feature that highlights and summarizes relevant information on a page.
An official Samsung account also criticized Apple’s announcements in a post on X: “Adding ‘Apple’ doesn’t make it new or groundbreaking,” the @SamsungMobileUS account posted. “Welcome to AI,” followed by an Apple emoji.
Behind the scenes, Apple has been trying over the past year to find ways of integrating generative AI into its products, The Wall Street Journal recently reported.
Apple’s shares have risen about 8% in the past year. Microsoft has surged roughly 26%, and it supplanted Apple as the world’s most valuable company by market capitalization in January. Google parent Alphabet is up more than 40% over the past year.
Microsoft and Google have rapidly incorporated generative AI across their products. Nvidia, the main chip provider in the AI boom, reached a $3 trillion valuation on Wednesday and briefly exceeded Apple’s market capitalization.
Apple Is Set to Join the AI Arms Race“AI is the thing that can get Apple out of the ditch,” said Trip Miller, managing partner at Apple investor Gullane Capital Partners. “They’re this big behemoth. It takes a new story to get them moving in a new direction. AI is that opportunity for them.”
Apple last experienced a surge in iPhone sales during the pandemic, when the company was upgrading the phone with speedier 5G cellular chips. Many of those consumers who bought during the pandemic are also due for a new phone, so they might be inclined to buy, especially if the new capabilities impress.
With Apple’s move to establish partnerships with external developers for more advanced AI capabilities, the company is showing that it is looking for ways to insulate itself from some of the risks and costs associated with these generative AI models, said David Wagner, a portfolio manager at Apple shareholder Aptus Capital Advisors. These new artificial-intelligence systems cost billions of dollars in computing resources, and some of them occasionally have made up facts and experienced other unexpected behaviors.
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“Apple is passing off the liabilities of AI to a partner like OpenAI,” Wagner said. “Apple knows which battles to fight and which ones not to fight. This isn’t one they’re fighting.”
On Monday, the company also said its new iPhone operating system, iOS 18, will allow more personalization, hiking trails in maps and expanded satellite capabilities.
AirPods will be able to allow users to take a call or send it to voicemail by nodding or shaking their heads. The company also demonstrated improved audio for voice calls even amid louder ambient sound.
Deepa Seetharaman contributed to this article.
Write to Aaron Tilley at aaron.tilley@wsj.com
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Appeared in the June 11, 2024, print edition as 'Apple Unveils Plans to Bring AI To Masses'.
