The AI Daily Brief: Artificial Intelligence News and Analysis - Apple Intelligence Powered by…Meta?

Episode Date: June 25, 2024

Apple is in talks with Meta for a potential AI partnership, which could significantly shift their competitive relationship. This discussion comes as Apple considers withholding AI technologies from Europe due to regulatory concerns. Discover the implications of these developments and how they might impact the future of AI and tech regulations. Learn how to use AI with the world's biggest library of fun and useful tutorials: https://besuper.ai/ Use code 'youtube' for 50% off your first month. The AI Daily Brief helps you understand the most important news and discussions in AI. Subscribe to the podcast version of The AI Daily Brief wherever you listen: https://pod.link/1680633614 Subscribe to the newsletter: https://aidailybrief.beehiiv.com/ Join our Discord: https://bit.ly/aibreakdown

On today's AI Daily Brief, Apple is in talks to partner with meta and might avoid Europe altogether. The AI Daily Brief is a daily podcast and video about the most important news and discussions in AI. To join the conversation, follow the Discord link in our show notes. Hello, friends. Quick note before we dive into today's show, I am just getting back after nearly 24 hours without power after some freak summer thunderstorms yesterday. And so unfortunately, today's episode only has our main discussion. we do not have headlines, and as you'll probably notice, it will be a little bit shorter than normal. However, never fear, there's lots going on, and tomorrow we will catch up on all the headline news. But for today, like I said, we are just doing our main episode talking about Apple and Meta.

To get into this, it's worth having a little bit of context. Apple and meta aren't really friends. They're not even really frenemies like Google and Apple. Google and Apple, of course, although they sometimes compete in terms of iPhone versus Android, They also have a huge financial relationship where Google pays Apple tons and tons of money to be the default search engine for Safari and on these devices. Meta and Apple, on the other hand, just come at the world in fundamentally different ways. Meta's advertising-focused business model is basically anathema to the product selling and thus data and privacy preserving Apple. What's more, in recent years, they've come more into competition around a new generation of devices.

You might remember back in February, when Zuckerberg really started to get his mojo back, by doing a direct-to-camera review of Apple's Vision Pro. Greg Eisenberg summed up, Mark Zuckerberg finally tried the Apple Vision Pro and compared it to the meta-Quest 3. He says, Quest is 7X less expensive yet way more comfortable. Quest is better for gaming, Xbox, and YouTube.

Quote, I'm surprised how much better Quest is for the majority of things. Of course, the last couple months have validated a lot of Zuckerberg's critiques, with the latest reports being that Apple is not even going to launch another high-end vision device because of a lack of demand. The Verge writes Apple's Vision Pro team

is reportedly focused on building a cheaper headset. According to the information, Apple has instead been focusing on finding ways to reduce the cost of components and is trying to launch a cheaper headset aiming to ship by the end of next year. Anyways, all of this is prelude to the news we got yesterday, that despite any past relationship, whatever, Apple and Meta have been in discussions around an AI partnership. Writes the Wall Street Journal, the longtime rivals have held talks about potentially integrating meta's generative AI model into Apple Intelligence. The WSJ kind of frames this as Apple playing catch-up.

They write, A latecomer degenerative AI, Apple has developed its own smaller artificial intelligence models, but has announced it will turn to partners for more complex or specific tasks. Of course, earlier this month at WWDC, when they premiered Apple Intelligence, the first partner that they announced was OpenAI's ChatGBT. Said Apple software leader Craig Federigi, we wanted to start with the best, and that ChatGPT quote represents the best choice for our users today. However, if you've been listening to this show for a while,

you'll know that Apple was also in conversations with Google and that a deal with Gemini just hadn't materialized, but now it appears that in addition to Gemini and Chatchip-T, they've also been talking with not only meta, but anthropic and perplexity. Again, if the big story here is just the fact of the talks at all, the journal tries to pull out some discussion around what it might all mean. They write the discussions with meta highlight the unlikely alliances

that are forming between major technology companies in the AI era. OpenAI's tech is said to be embedded in Microsoft and Apple devices, and an Apple and meta deal would be noteworthy given how much the two companies have been at loggerheads over other emerging tech issues. This is certainly true. One of the things that we've discussed quite a bit here on this show is the fundamental break with the patterns of history that AI represents as big tech has gotten involved so early in this new tech category. There are a million reasons for that, most notably the high cost of compute, which really makes them kind of the only game in town when it comes to getting the capital needed to actually compete and train these models. Still, it definitely causes for some uncomfortable bedfellows. Not only, for example, are OpenAI and Microsoft trying to deal with the fact that OpenAI

was a central feature of the Big Apple announcement, but they're also figuring out what their own relationship is, and where OpenAI sits relative to the new Microsoft AI internal team, led by the former group that was at inflection. Coming back to the meta deal, though, the journal also confirmed from its sources that these deals are not financial deals per se. They write in talks with other AI companies Apple hasn't sought for either party to pay the other. Instead, the AI companies can sell premium subscriptions to their services through Apple Intelligence, as it does on its app store the iPhone maker would keep a cut of subscription revenue from its devices.

The journal also points out that if the discussions haven't been finalized, and even if they are, it's not 100% clear what it's going to mean financially for the companies. Quote, even though deals with Apple would help AI companies obtain massive distribution of their products, it is unclear how much of a financial windfall it would be. Gene Munster, an Apple analyst and managing partner at Deepwater Asset Management, pointed out that while ChatGBTGPT usage is expected to double from the Apple partnership, its infrastructure costs are also expected to grow 30 to 40%, and his best guess is that 10 to 20% of Apple users will upgrade from ChatGBT to premium.

For some, this is all just confusing. Jack Raines writes, so Apple signed a deal with OpenAI, and now it's considering a deal with meta and anthropic and perplexity? What is the end goal of this? Siri becomes one of five different Gen.A.I. models. However, Apple Leaker puts it pretty crisply. It seems nobody understands how all this works. Apple will offer a variety of AI models like ChatsyPT, Anthropic Claude, Google Gemini, meta-a-i, perplexity, etc, to answer quote-unquote world knowledge questions which Apple's own secure models cannot. If you don't trust any of these companies, you can simply choose not to opt-in to use them. But if you do opt-in, your IP address will be obscured,

no personal information is shared, and your query is not allowed to be stored. The point here being, and there's shockingly little of this conversation, Apple doesn't want to be kingmaker among these AI companies. Even though ChatGPT got announced first, they want Apple Intelligence to be the big brand, and all of these companies to just feel like offshoots. In that light, not only is it not surprising that they're talking with meta, it would be insane to think that they wouldn't be. And really, that's the picture that's starting to emerge. It feels likely to me that within the next six to 12 months, every single one of these major models, all of the big AI labs, are able to offer what they have through Apple Intelligence. The more interesting question then is who this benefits

most. One argument could be that it just accrues to the existing brand winners, that people opt into chat GPT because that's the one they already know, for example. But there's also a compelling argument that by being elevated along the same level as the chat GPTs and Google Gemini's of the world, it actually could help a clod, for example, do more to catch up. Anyway, from where I'm sitting, the big thing is that this confirms that Apple wants Apple intelligence to be the big recognized brand when it comes to how people interact with AI, and all of these partners to be exactly that, just partners. A quick note before we get back to the show, today's episode is brought to you by

Super Intelligent. Super is, of course, the platform that we built and released a couple months ago to help people learn how to use AI. It's built around fun, fast tutorials that get you actually using AI in minutes, not hours, and certainly not days. The learning all happens in the context of an engaged community, and we've got a bunch of exciting features rolling out in the weeks to come. One of those is a new team's version of the platform, which includes a custom curated playlist, as well as a showcase where people on your team can share their use cases and projects in AI across the organization. If you are interested in being a part of the Super for Teams beta, go to B-Supertai slash partner so you can learn about the program.

Now one other interesting piece of news regarding Apple, the information reports Apple throws down the gauntlet to European regulators. Martin Peers writes, will Europeans start to regret their government's aggressive regulation of U.S. tech? That's surely going to be a question, sparked by Apple's decision today to withhold a bunch of attractive new technologies, such as its AI-powered offerings from its products in Europe, citing the continental rules on how tech firms operate. Basically, at the end of last week, Apple announced that it would not be rolling out AI in the EU over concerns around the EU's Digital Markets Act. Apple said in a statement, we are concerned that the interoperability requirements of the DMA could force us to compromise the integrity

of our products in ways that risk user privacy and data security. Bloomberg writes, Apple's decision to halt the rollout in the EU will mean consumers in all 27 of the bloc's nations, including the likes of France, Germany, Spain, and Italy won't have access to the company's ambitious new AI technologies for now. It's not clear how the features might violate the DMA, but withholding the technology threatens to irk consumers in the region, who might potentially put pressure on regulators. Moving back to Martin Peers again in the information, he writes, Apple blamed its decision on rules imposed by the Digital Markets Act in Europe. Is that a valid excuse? Who knows? In a way, it doesn't matter. What's significant is that a U.S.

tech giant is finally responding to the increasingly demanding European rules. It feels like it's only a matter of time before a U.S. company decides the European market simply isn't worth the trouble. Pears goes on to point out that Apple doesn't quite have the same market power in Europe that is as in the U.S. For example, it has about half the U.S. smartphone market but only about a third in Europe. But as Pears writes, Tim Cook may think taking a stand against European bureaucracy is worth the cost of lost iPhone sales.

If that's what Cook is thinking, he should be applauded. There's ample evidence Europe's regulations are hurting the continent. For evidence, Pierce points to another Wall Street Journal article in January that argued that Europe was falling behind the U.S. and China in tech sectors such as AI and electric vehicles, thanks to its rules. Quote, Apple's decisions suggest Europeans may soon have to be content with substandard consumer tech services as well. This is certainly the vibe that you get when you look on Twitter. Daniel Castro writes, the EU is offering a masterclass on how to stall digital innovation. David Galbraith writes, wake up Europe the digital age is bypassing you. You have no Google,

Amazon, meta, Apple. You arrogantly called SpaceX a fanciful dream and it wiped out the European and space agency. You have no Nvidia, and your response to AI has been to regulate before you have anything domestic to regulate. Your car industry is about to be wiped out by the Chinese. Your biggest economy shut down nuclear out of spite and with fraud. Your capital markets have no liquidity, and your startups are drowning in your bureaucracy. It is pretty hard to deny that Europe's actions suggest that they're more interested in leading on regulation than they are on leading in the industries that they are regulating. Now, to the extent that regulations are actually stimulating to industry, maybe there's some nuance here. I think you could make that argument a lot better

in the crypto case, for example, where the European Mika rules actually probably have helped relative to, for example, the U.S.'s lack of clarity around digital assets. This big focus on regulating it versus incubating it, it's hard to see how it ends up with a robust European AI sector. Certainly something to keep watching, but for now, that is going to do it for today's AI Daily Brief. Appreciate you listening or watching as always, and until next time, peace.