Apple-Alibaba AI Push Reportedly Hits Regulatory Wall Due To Rising US-China Trade Tensions

Apple’s (AAPL) effort to bring its new artificial intelligence services to China through a partnership with Alibaba (BABA) is reportedly facing delays amid escalating trade and regulatory tensions between Washington and Beijing.

In February, Apple partnered with Alibaba to power “Apple Intelligence” on iPhones in China, marking a rare collaboration between two of the world’s most valuable tech companies. 

However, according to a Financial Times report, the rollout has yet to gain regulatory approval from China’s Cyberspace Administration (CAC), which vets generative AI services before they are released to the public.

The CAC has so far approved more than 300 domestic AI models. However, despite Alibaba’s domestic standing, the proposed Apple partnership has drawn scrutiny, reflecting broader geopolitical strains. 

The report stated that CAC’s hesitation stems from U.S.-China political friction, sparked by President Donald Trump’s tariff threats and nationalist rhetoric targeting Chinese tech.

The U.S. Commerce Department’s Bureau of Industry and Security has also raised concerns with Apple and Alibaba about the deal, according to a report by The New York Times. 

U.S. officials worry that the partnership could strengthen China’s AI capabilities and expose Apple to Beijing’s tight controls on data, content, and censorship.

For Alibaba, the alliance presents an opportunity to strengthen its position in China’s competitive AI landscape, which includes challengers such as DeepSeek. 

For Apple, the move is aimed at protecting its market share in China, where local competitors, such as Huawei, have eroded iPhone sales.

Apple lost its title as China’s top smartphone vendor in 2024 and has been navigating rising political pressure since Trump returned to the White House. 

In April, after Trump announced reciprocal tariffs on China, Apple CEO Tim Cook said the iPhone 17 lineup would be assembled in India for U.S. distribution. However, Trump later warned that any iPhones not built in the U.S. could face a 25% tariff.

Apple’s stock edged 0.09% higher in midday trade on Wednesday. The shares have fallen 18% this year but gained 4% over the past 12 months. 

Alibaba’s stock, on the other hand, gained more than 3.5% in midday trade on Wednesday. The shares have gained more than 40% this year and over 50% in the past 12 months. 

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