In a noteworthy announcement during the Dubai summit, Alibaba's chairman, Daniel Zhang, revealed a collaboration with Apple focusing on artificial intelligenceThis move initially stirred speculation regarding the exclusion of Baidu from Apple's plansHowever, the situation took a swift turn—Apple had not sidelined Baidu after all, as both companies continued to work together on developing AI capabilities for the China-specific version of the iPhone.

On February 13, insiders disclosed that Apple is still engaged in a partnership with Baidu, intending to integrate AI functionalities tailored for the Chinese marketThis collaboration operates under a non-exclusive agreement that serves to mitigate risks for Apple, reflecting the company’s desire to have multiple partnerships in place.

Apple's reputation as a provider of a tightly controlled ecosystem with strict technical standards adds weight to the importance of its partnershipsThe fact that Apple is willing to collaborate with Chinese firms like Baidu indicates an acknowledgment of the capabilities of China's expansive AI landscape, which could, in turn, enhance the brand value of its associates.

The market has responded vigorously to news of the partnership between Alibaba and Apple, causing a noticeable spike in Baidu's stock pricesFollowing a surge on February 13, Baidu saw its shares rise again by 2.88% before the market opened on February 14, achieving a market capitalization exceeding 246 billion yuan.

Apple's strategy includes collaboration with a number of major AI model developersIn this framework, Baidu is tasked with the development of image processing functionalities, expected to be a component of Apple's forthcoming AI features, branded as "Apple Intelligence" or simply "Apple AI".

Market analysts like Ivan Lam from Counterpoint Research suggest that Apple may adopt a multi-supplier approach in China, allowing for a broader range of AI service vendorsThis strategy could lead to the inaugural launch of an Apple AI version supporting languages beyond English, projected for release in 2025.

Apple is particularly conscious of its market position following a decline in revenue from China, which fell by 11% in the first quarter of fiscal year 2025. CEO Tim Cook has attributed part of this revenue dip to the lack of AI features in Apple’s offerings in a market increasingly dominated by AI-centric brands such as Huawei and Xiaomi.

To reclaim market share, Apple must enhance Siri's ability to understand and process the Chinese language, as well as improve local search functionalities

Advertisements

Baidu's strengths in natural language processing and image recognition, established through years of experience with its Chinese-language datasets and search technology, position it as a vital ally for Apple.

Ethan Qi, Deputy Director at Counterpoint Research, believes this partnership signifies Apple’s long-term strategyIn a future dominated by AI features, smartphone brands lacking these capabilities risk losing high-end users.

This approach aligns with Apple's longstanding preference for a diversified supply chainWhile Apple's AI collaborations in international markets currently involve OpenAI, there is contemplation about incorporating additional AI developers, including Google’s Gemini, helping to ensure a wide-ranging and robust AI offering.

What emerges is a clear message: Baidu remains an integral player in Apple's AI ambitions, proving difficult to replace in this evolving landscape.

Apple’s AI framework includes local and cloud-hosted large language models, as well as third-party models like ChatGPTOpenAI is involved at the third layer of this tri-level architecture.

However, in China, Apple’s proprietary large language models have yet to receive regulatory approvalTo expedite the rollout of its AI functionalities for the upcoming China-version iPhone, Apple must navigate regulatory processes with local partners, securing the necessary model registrations and approvals.

Baidu's expertise and capacity to provide software and hardware services are critical in this contextSeveral phone brands, including Samsung and Honor, have already integrated Baidu's intelligent cloud services, utilizing the capabilities of its Wenxin large model.

As of November last year, Baidu's Wenxin Yiyan (also known as Ernie Bot) reportedly boasted 430 million users, with an average of 1.5 billion interactions per day, showcasing its reliability and large-scale practical applicationsFurther data reflecting these interactions is expected to be highlighted in the company's next earnings report.

Unlike Baidu, DeepSeek has yet to establish this level of capacity for interaction; previously, Apple evaluated DeepSeek's model but eventually opted out due to concerns regarding its insufficient experience supporting large clients.

Despite DeepSeek grabbing attention in some circles, it has not yet achieved the status of a "killer app" in the digital era, where user engagement frequently falls short of captivating millions of daily active users.

Baidu founder Robin Li has candidly admitted that achieving a killer app status remains a formidable challenge, reflected in worldwide searches for an all-encompassing SuperApp.

The shift in focus towards AI, ignited by DeepSeek, has begun to reshape paradigms within the large model sector

Advertisements

Users are increasingly demanding not only cost-effectiveness but also innovative approaches to architectural design from these modelsThis evolution is prompting leading figures in the tech space, including OpenAI's Sam Altman, to reassess their strategies.

Baidu is keen to strengthen its ties with partners like Apple, ensuring that their collaboration is tightly woven into the fabric of their AI development.

On a cost basis, the expense associated with utilizing large models is reportedly decreasingIn a recent forum, Li mentioned how the added costs related to large language model implementations have significantly reduced, projecting a potential cost decline of over 90% within the next yearMoreover, Altman had previously suggested that the expenses of employing certain levels of AI technology might decrease by a factor of ten every twelve months.

Baidu recently announced that starting April 1, Wenxin Yiyan will be available for free to all PC and app users, coinciding with Altman's announcement that ChatGPT will soon leverage GPT-5 for an unlimited, free usage option under standard intelligent settings.

Looking ahead, Baidu is gearing up to launch its next generation of large modelsOn February 14, the company conveyed plans for a series of Wenxin model updates—4.5—to be released in the coming months, with the official open-source release scheduled for June 30. Baidu also aims to unveil the next iteration, Ernie 5.0, in the latter half of this year, featuring significant enhancements in multimodal capabilities.

This all signals that the forthcoming iterations of foundational large models will continue to progress rapidlyThe ongoing AI free war might just be the precursor to a more extensive competition in the AI ecosystem.

With the landscape rapidly evolving—from OpenAI to DeepSeek—disruptive innovations are constantly on the horizon, reshaping the industry dynamics in just a few yearsFirms like Baidu and Alibaba should remain vigilant and proactive if they wish to maintain their leadership in this increasingly competitive AI landscape.

Advertisements

Advertisements

Advertisements