From a privacy-first philosophy to an AI turning point

Before the AI boom ignited by the launch of ChatGPT in late 2022, Apple had secured its dominance through consumer devices and the widespread integration of Siri across its ecosystem.

Its strategy was clear: users paid a premium for devices in exchange for strong guarantees that their personal data - from messages and photos to notes - remained private. That data would not be used as fuel for advertising systems.

Meanwhile, other tech giants pursued a different path, offering free services while generating tens of billions of dollars annually through targeted advertising. Under the philosophy shaped by Steve Jobs and continued by Tim Cook, Apple consistently positioned privacy as a core value.

That is why its latest move has surprised many observers. In January, Apple signed a multi-year agreement to use Google’s Gemini AI to power an upgraded version of Siri.

If Google once paid around US$20 billion annually to remain the default search engine on iPhones, the dynamic is now reversed: Apple is paying to access external AI technology.

While Apple’s financial strength makes the cost manageable, analysts are more concerned about the implications for user data. If such data is used to improve Google’s algorithms, Apple’s long-standing privacy commitments could be challenged.

Many experts believe Apple now stands at a historic crossroads - balancing its traditional values against the urgency of adapting to a transformative technological shift.

Falling behind in the AI race

Apple’s current position is partly the result of lagging behind competitors in AI development. The long-awaited upgrade to Siri has been delayed multiple times, even as the company insists it will launch later this year.

In 2024, Apple introduced Apple Intelligence, featuring tools for image generation, text rewriting, notification summaries, and ChatGPT integration. However, user response has yet to reach the level of enthusiasm seen with rival platforms.

A key difference lies in spending strategy. Apple has remained relatively cautious, unlike competitors that have invested hundreds of billions of dollars into AI infrastructure.

While others train massive models using vast datasets, Apple has deliberately avoided this approach - a decision some industry insiders believe has put the company at a disadvantage in generative AI.

For years, Tim Cook has described privacy as a “fundamental human right.” Apple has therefore prioritized processing AI tasks directly on devices, resorting to its Private Cloud Compute system only when necessary.

Still, some investors argue that Apple’s leadership underestimated the speed of change. Without a breakthrough in intelligent AI assistants, the company risks losing control over the next phase of the tech ecosystem.

Siri once represented a major opportunity. Launched in 2011, it preceded many competing assistants but soon stagnated. Some experts believe Apple “lost a five-year advantage” it once held.

A major bet on on-device AI

Today, most AI systems rely on cloud computing, as large models remain too resource-intensive to run on smartphones. But this is beginning to change, with smaller and more efficient models emerging.

In the coming years, significant processing workloads could shift directly onto mobile devices - a trend Apple has been preparing for since 2017 by embedding dedicated AI hardware into its products.

If AI processing moves on-device, user data would no longer need to be transmitted to the cloud, allowing Apple to maintain its privacy standards while remaining competitive.

Some analysts see this as part of a broader historical cycle, where computing power moves from centralized systems to the “edge” - from mainframes to personal computers, and then to smartphones.

In that context, Apple’s partnership with Google may serve as a bridge, buying time while its own technology matures.

At the same time, questions remain about the future of devices. If AI interfaces shift toward wearable or screenless formats, Apple’s traditional design advantages could be diminished.

However, skepticism persists. Several screenless AI device projects have already failed, and many experts believe the future will be an ecosystem of devices, with smartphones continuing to play a central role.

If that scenario unfolds, Apple could once again take the lead, leveraging its hardware capabilities and tightly integrated ecosystem. The company is ultimately betting that a new generation of Siri will help it re-enter the AI race.

After half a century of innovation, Apple now faces one of its most significant challenges since the rise of the smartphone. It may have lost its early advantage in AI, but with its hardware foundation, closed ecosystem, and on-device AI strategy, many insiders believe the company still has a path forward.

Hai Phong