Stop the presses (or whatever we use these days in publishing)! The years-long fight between Apple and Meta driven by the iPhone maker’s iron control over its vast and lucrative App Store and customer base may see a cessation of hostilities in the AI era.
Given the harsh words traded between the two sides, as news it verges on man bites dog territory. But talks between the two sides, first reported by the Wall Street Journal on Sunday, also suggest how fast the ground is shifting in the burgeoning market for artificial intelligence, especially in the two weeks since Apple held its World Wide Developers Conference.
There the hardware giant described a world where users of its 2.2 billion devices (at least those with powerful enough devices) would be able to access, for free, “Apple Intelligence.” For everyday uses – such as organizing and editing photos, improving and summarizing emails and other writing, and setting up appointments – they would rely on Apple’s own AI tools built into each device’s operating system.
More complicated queries would be sent for processing to Apple’s own private compute servers, without recording any of the personal information from the user behind the prompt.
And then, CEO Tim Cook said, users would be able to send global or particularly complex or specialized devices to third-party AI providers, beginning with industry leader OpenAI’s ChatGPT, but not necessarily ending there. Ultimately, company officials said, Apple users will be able to choose from free access to multiple providers directly through Apple’s own mediated interface. For those with ChatGPT or other subscriptions, they could also access those functions through Apple’s operating systems, much like a video streaming platform that also sells separate subscriptions to streaming services.
The approach neatly turned upside down the discussion about Apple’s alleged laggard position in the fast-moving AI battle that investors expect may add trillions of dollars in value to the economy and the companies leading that transition. Now, Apple is the gatekeeper to those devices (though many hundreds of millions of them will almost certainly need upgraded replacements to use everything, a potential bonanza for the company).
After a brief drop in shares for Apple the day of the WWDC announcements, shares quickly skyrocketed from around $191 late on June 10 to more than $219 apiece two days later. Share prices have since settled to around $208, still roughly a third higher than the $165 price where the stock was scuffling in the bad ol’ days of mid-April.
And the opportunity to join the Apple party has set off reports of numerous major AI providers looking to get on Apple’s VIP list.
“It’s 9 PM in an AI party that’s going to run until 4 AM,” said Daniel Ives, managing director and senior equity investment analyst at Wedbush Securities and a long-time Apple bull, during a CNBC appearance on Monday.
Ives predicted that Apple share prices, even at a near-record $208, “could run another $40” per share by next year, to a valuation north of an unprecedented $4 trillion . The company’s market capitalization on Monday hovered around $3.2 trillion.
Meta has been battling with Apple for years over the steep charges Apple exacts from developers to distribute on its lucrative iPhone App Store. The bad feelings have even devolved into occasional snarky comments by Cook and Facebook CEO Mark Zuckerberg about the other company’s policies and privacy approaches.
Indeed, part of what drove Zuckerberg to change the name of his social-media company from Facebook to Meta was a belief that he needed to create a new kind of media and services platform beyond the mobile phone, where he not incidentally also could control the app store, policies, payments and interface. The result has been tens of billions of dollars of investment in immersive experiences and the Quest line of headsets.
Image from Meta’s new ad for its AI tools
AI’s gold rush, however, has made a habit of creating strange new bedfellows. Meta has spent billions more dollars developing its LLAMA large language model, among other AI tools. And last week, the company began running a new Meta AI commercial on social media and television, according to iSpot.TV. It’s definitely playing for keeps in AI as well as immersive media.
And the best way for Meta to reach billions of users outside its own sturdy social-media platforms is to get on the Apple Intelligence highway. That made the possibility of a previously near-unthinkable partnership suddenly very real, and not artificial at all.