Apple Unveils Plans to Bring AI To iPhone --- Personalized system to offer features using ChatGPT and stress privacy

"Apple joined the artificial intelligence 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 teamed up with OpenAI, and its ChatGPT, for some new AI functions, such as answering more complex queries or composing messages, capabilities that Apple's AI cannot 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, Apple said its new software will retrieve information from across apps and scan personal information to help users proofread text, call up photos of specific family members or gauge traffic patterns ahead of an atypical commute. Users can create images and emojis and convert rough sketches into polished diagrams.

An updated Siri will be able to better understand natural language, process contextual information and take action in apps. Developers can use new tools to take advantage of the AI systems. 

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 unveiled the ability to connect to external AIs and said it planned to add support for additional artificial-intelligence systems in the future.

The company has held talks with Google and AI startup Cohere, The Wall Street Journal reported.

OpenAI CEO Sam Altman, who was on hand at the Apple event but didn't speak during the livestreamed broadcast, said he was grateful for the opportunity to integrate ChatGPT into Apple's devices. He wrote on X: "think you will really like it."

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.

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 an AI system dubbed xAI, said 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 elsewhere online for free, 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. Apple shares fell by almost 2% on 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 Apple showcased have been available in other software for some time, including auto-reply for emails and photo editing that can remove distracting background images.

Apple's shares have risen almost 7% in the past year. Microsoft surged about 30%, 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 cap.

"AI is the thing that can get Apple out of the ditch," said Trip Miller, managing partner at Apple investor Gullane Capital Partners." [1]

1. Apple Unveils Plans to Bring AI To iPhone --- Personalized system to offer features using ChatGPT and stress privacy. Tilley, Aaron.  Wall Street Journal, Eastern edition; New York, N.Y.. 11 June 2024: A.1.