Apple has announced that it may not be able to roll out its much-anticipated artificial intelligence (AI) features to millions of customers in Europe this year due to concerns over European Union (EU) regulations. The iPhone maker cited the EU’s stringent tech regulations, particularly those requiring interoperability, as potential risks to user privacy and data security.
The EU’s Digital Markets Act (DMA) aims to impose significant restrictions on large technology companies to foster digital competition. One of the key provisions of the DMA is the requirement for interoperability, which mandates that software must be compatible across different operating systems and hardware platforms. This regulation is intended to make it easier for consumers to transfer their data and switch between service providers.
Apple has specifically highlighted this regulation as problematic. The company argues that the interoperability requirements could force it to compromise the integrity of its products, thereby jeopardizing user privacy and data security. Apple has expressed its commitment to making these technologies accessible to all users while working with the European Commission to find a viable solution.
The European Commission, on its part, has emphasized that large tech companies are welcome to offer their services in Europe, provided they comply with the DMA’s rules aimed at ensuring fair competition. This regulatory stance has put Apple in a challenging position, as it seeks to balance compliance with the DMA while maintaining its product standards.
Apple is not alone in facing these regulatory challenges. Meta Platforms recently announced a delay in launching its Meta AI in Europe following a request from Ireland’s Data Protection Commission to pause the training of its large language models using public content from Facebook and Instagram. These regulatory pressures are reshaping the timeline for AI feature rollouts across major tech companies.
Apple’s new AI system, known as Apple Intelligence, is among the products potentially affected by these regulatory hurdles. Apple Intelligence is designed to offer users an AI assistant deeply integrated into iPhone, iPad, and Mac operating systems. The AI features include scanning personal information to assist with tasks such as proofreading texts, summoning photographs, and creating custom emojis.
Despite these advancements, Apple Intelligence’s rollout in Europe remains uncertain. The AI system, which will launch in parts later this year, also integrates with OpenAI’s ChatGPT and plans to support other AI models in the future. However, the regulatory environment in Europe may delay these plans.
Investors had initially reacted positively to Apple’s AI strategy, sending the company’s shares to record highs following the Worldwide Developers Conference. However, the announcement of potential delays in Europe has left the company’s shares relatively unchanged, aligning with other large tech firms.
The standoff with European regulators is part of a broader contention over the DMA, which aims to open up closed digital ecosystems like Apple’s App Store. Apple’s compliance plan, revealed earlier this year, included new fees and restrictions for app developers looking to leverage the law to launch products outside the App Store. This has further strained the relationship between Apple and European regulators.
Withholding Apple Intelligence from the European market could impact Apple’s business significantly in the region, which is its second-largest market after the Americas. Investors are banking on the new AI feature to drive quicker upgrades to new iPhone models, potentially shortening the iPhone replacement cycle.
Currently, Apple Intelligence is limited to the iPhone 15 Pro and 15 Pro Max. The company is expected to release a new lineup of iPhones this fall, as part of its regular product release schedule. Analysts like Martin Yang from Oppenheimer suggest that while the AI feature is crucial for shortening the iPhone replacement cycle, it may take time for consumer excitement to build and translate into accelerated sales.
Apple is also exploring partnerships in China to launch its new AI features. The company has been in discussions with local tech giants such as Alibaba Group, Baichuan AI, and Baidu. These partnerships are part of Apple’s strategy to keep pace with Chinese phone manufacturers who have rapidly integrated AI functions into their devices. In the first quarter of the year, Apple fell to third place in market share in China, trailing behind domestic brands.
The global slowdown in iPhone sales over the past two and a half years, with a notable year-over-year decline in the most recent quarter, underscores the importance of successfully launching new features like Apple Intelligence. European regulators have launched an investigation into Apple’s compliance with the DMA, and potential charges related to the company’s App Store rules are expected.
In addition to Apple Intelligence, the company may also delay the release of other new software features in Europe, including the ability to mirror the iPhone on a Mac and a new screen-sharing capability. These potential delays highlight the complex regulatory landscape that Apple and other tech giants must navigate to bring their latest innovations to market.