EP 567: Apple’s AI Challenges — What Went Wrong with Siri?

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Is Apple cooked when it comes to generative AI? Well, a recent article that just came out from Bloomberg is reporting that Apple is actually reaching out to its closest competitors to essentially do the job they couldn't do in providing a smarter AI-powered Siri assistant. So yeah, I think they are. So I'm going to be breaking down on today's show what was in that report from Bloomberg, how Apple went from AI power to laughingstock, and why I think this is the beginning of the end for Apple in terms of generative AI. All right, hope you're ready for some spicy hot takes on Hot Takes Tuesday. I'm ready. Let's get into it. What's going on, y'all? If you're new here, welcome. This is Everyday AI. My name is Jordan Wilson and I'm the host. And this thing, it's your daily livestream podcast and free daily newsletter helping everyday business leaders like you and me not just learn what's happening in AI, but how we can leverage it to grow our companies and our careers. Like, Should you be investing all in on Apple AI? Probably not. So if you want to learn more from today's episode, you know, just the bullet points or some additional info we didn't have time to get to, we're going to be dropping that in today's free daily newsletter. It's a daily newsletter. So at youreverydayai.com, you can sign up for it there. We're going to keep you up to date with everything else happening in the world of AI news. And you can also just on our website, go listen to 550+ back episodes. You can listen to them, watch them, all on our website, all for free. It is your cheat code to become the smartest person in AI at your company. All right, speaking of AI news, if you want it, this is going to be in the newsletter. Let's just get straight into it. I want to talk about why I think Apple is absolutely cooked when it comes to generative AI, and it actually starts with this Bloomberg report. Uh, so, um, Actually, you know what? Let me just call this out. Livestream audience, I want to hear from you all. All right. What's your hot take? Am I completely wrong here? Or if you're, you know, going to be reading today's newsletter reply, let me know. But I do want to feature my favorite hot take from our livestream audience in today's daily newsletter. So if you want your hot take heard by thousands of people around the world, just go ahead and drop in the livestream comments. I'm going to pick my favorite. Hot take. But, you know, so this is all starting from this report from Mark Gurman. And Mark Gurman is a well-respected tech journalist at Bloomberg. He's essentially the Apple whisperer. So he has a stellar track record on just about everything, but specifically Apple. That is the main thing that he covers. And his report that just came out a few hours ago is saying that Apple is considering using AI technology from Anthropic. Or OpenAI to power Siri, sidelining its own in-house models in a potentially blockbuster move aimed at turning around its AI efforts. Yeah, pretty telling there if your move to turn around your AI effort is to stop using your own AI. So here's what we're going to go over during the rest of today's show. We're going to talk a little bit about some of the internal development disasters that forced this dramatic strategic pivot, if you want call it that. I like to say this is more of admitting that you failed and you can't keep up. So we'll see how Apple's stock responds. I would expect it to kind of go down over the next couple of days. But hey, I'm not a financial analyst, but I stayed at a Holiday Inn Express once. How Apple went from AI pioneer to industry laggard in a few years and why Amazon's successful Amazon partnership or sorry, Amazon's successful Alexa partnership with Anthropic could even reveal the new industry playbook. So let's just go straight to hot take, y'all. Apple has reportedly spent millions, with an S, millions of dollars a day trying to build their own generative AI systems and large language models, and they've failed to produce literally anything meaningful Unless by meaningful, you know, combining two different gen emojis using Apple's AI is meaningful to you. Aside from multiple class action lawsuits, Apple has not produced a single useful thing. Class action lawsuits aren't useful. It's just a joke there. But it's so bad. It is so bad. Apple's AI efforts are so bad. They actually put out what I said was marketing disguised as research, saying that large language models essentially stink, right? And that these new reasoning models that Apple has been unable to develop internally, well, they're not actually that good, right? So yeah, if you actually want that hot take from a couple of weeks ago, go listen to episode 543, which is Apple's Weaponized Research: Insights Its Illusion of Thinking Paper. Yeah, literally things have gotten so bad at Apple that they are putting out pretty bad research that immediately got debunked by the scientific AI community. That's how bad it was. And this new smarter AI Siri that has been kicked down the road for multiple years, according to last year's Apple WWDC. So WWDC 2024, we were supposed to already have this new AI smart Siri. And the latest reports that came out a few weeks ago were saying that it could get pushed back until 2027. So we don't have an updated timeline yet, or if this potential partnership with either OpenAI or Anthropic means that that date might get pushed up. But y'all, Apple was so bold a year and a half ago at WWDC 2024, right? Their big yearly conference. They tried to rebrand artificial intelligence and call it Apple Intelligence. The audacity, right? They promised all of these amazing things. And the headliner honestly was this new smarter, more intuitive Siri. Because if any of you are using Apple devices on a day-to-day basis like myself, you know Siri does nothing. If I'm being honest, I would have more confidence in the original ELIZA chatbot from the 1950s to respond to most of my queries than I would for Siri. I think I use Siri to get the weather. Sometimes it works. Most of the times it doesn't even work. So this was supposed to be Apple's AI redemption story, this new smarter Siri. It was supposed to put everyone at ease. It was supposed to appease the analysts and reassure investors and the board at Apple. But instead, we got another catastrophic failure from what was once the most prominent and powerful and innovative company in the world, of which it is no longer any of those three. And I'd say one of the main reasons why Apple is no longer considered the most innovative, powerful, uh, company in the world is because of its lack of actual measurable measurable progress on generative AI. Generative AI, that is the economy. That is the next leap in world power. Let's be honest, there's a reason that there's a legit arms race between the US and China because whoever kind of controls or creates the next most powerful AI model, whether that's AGI, artificial general intelligence, or something else, They become the world power that is in an unfair advantage over everyone else. Apple is nowhere to be heard of in this conversation, right? Some of its biggest competitors, Google and Microsoft, they're still in that conversation of being some of the world's most innovative companies. Apple, not anymore. Again, unless you think Genimojis. Yeah, like I keep bringing this up. Because Apple really at their WWDC this year where they took a quote unquote gap year off of AI, literally one of their biggest announcements on the generative AI front was, hey, instead of creating one emoji with AI inside, you know, iMessage or whatever, you can combine multiple Genmojis. Oh my gosh. Oh my gosh. Apple is so innovative. That is a laughingstock. I am embarrassed, right? I'm embarrassed that I've been an Apple user for so long and I don't know how many iPhones and Macs I have and I've owned over the years. I'm embarrassed to have, you know, I guess supported a company so loyally for so long. And me obviously being a generative AI fan and practitioner and analyst, consultant, all of those things. I, I don't think we will ever see, at least not in my time, a company fall from grace so quickly as Apple has, as demonstrated by this. So let's talk a little bit more about what they're actually trying to do according to this report. So the Bloomberg reports that Apple is in talks with both Anthropic and OpenAI to essentially essentially take over their Siri development because Apple can't figure it out. Just like how when they kind of rolled out their certain aspects of their Smarter Siri 1.0, essentially it kicks most queries to ChatGPT. It's like, yeah, you're gonna have to use ChatGPT for that, right? So this potential deal would sideline Apple's own in-house AI models completely. So it's not like they would, according to reports, be using a hybrid like they're kind of using now, right? Right now, their own on-device AI is handling some Siri queries, but most of them are just getting kicked to ChatGPT. So this was essentially a stall tactic of more than a year with this OpenAI partnership where essentially we still have the same dumb non-AI Siri and it just kicks most requests to ChatGPT, but it can't take advantage right now of any of the information on your phone. You can't ask it. Hey, what did this person text me? What's in my email? It's funny, actually, Perplexity rolled out an iOS assistant that is better than Siri. And one thing that Apple kind of did to their credit, but I guess was also tipping their hat at where they were going, is they opened up their on-device or their Edge AI, their small language model to third-party developers, which I guess was another nod at saying, yeah, we really can't figure this all out internally. So let's open it up. Open up the reins after a year of keeping this in-house and allowing third-party developers to use essentially the, uh, the AI that is on, uh, Apple's iPhones, right? So the AI capabilities, right? So they have small language models, but for a year they didn't open that up to anyone else. So this is just the latest, uh, kind of departure, uh, from Apple's legendary vertical integration strategy. It's not even there, right? This is not the Apple that most of us have known over the past, you know, decade or so. So let's dig in a little bit more on what Apple's kind of desperation, you know, kind of the desperation level internally at Apple according to this report from Bloomberg. So Mark Gurman revealed that Apple is requesting custom AI models from competitors. So they're like, yeah, can you just kind of make this for us? It's not It's not like they're like, hey, we're just going to use this model you already have and we're going to go ahead and fine-tune it or work on it ourselves. They're like, no, can you just make us something for us? Which obviously Apple would do, any company that size, but it's telling that they're not even able to just work with one of the current models. Anthropic's Claude has emerged as a leading candidate after some internal testing, but there are some pricing disputes. More on that here in a minute. It. And Apple has demanded that models run on their infrastructure to preserve their privacy narrative. So, uh, one thing Apple has, uh, gotten right over the years is putting privacy first. And when it comes to AI, that is obviously of utmost concern is, you know, what happens with all of my personal data that may be living, uh, on my iPhone. So, you know, this could be another thing that causes even more delays. So like I said, the LLM Siri, or sometimes people say the AI Siri or Siri 2.0, right? This project was originally supposed to be out, but it has already gotten pushed back to 2027 and it could even get kicked obviously more times. It's already gotten pushed back, I believe, more than a half dozen times. And CEO, Apple CEO Tim Cook, anyone notice my clever naming of this episode? That wasn't AI. That was me. Yeah, Apple is cooked on generative AI. But CEO Tim Cook removed AI chief John Giannardrea. Giannardrea. I don't know. I probably got that right a couple of months ago in March. And Apple's own models reported perform— their own models reported performance was 20% worse than the aging competitor technology. So not even compared to, you know, state-of-the-art technology. So right now, here's what's happened. Apple promised a smarter AI-powered Siri. They couldn't deliver. What was delivered was a bunch of class action lawsuits because Apple advertised this, right? They said, hey, buy the new iPhone and here's this. Here's a look at this smarter Siri. They literally had commercials and it just didn't exist. So they're right now the butt of any AI or innovation joke. So users are mocking this dumb Siri or the Apple, quote unquote, Apple intelligence, that it can't really do anything. And class action lawsuits are going to, I think, continue to be piling up for false advertising promises. And their AI features are being described by many as half-baked toys by reviewers. And I, if I'm being honest, I think that's giving a little too much credit to things that are half-baked because there's things that are half-baked that are fantastic. Half-baked pancakes, low-key really good, right? So even calling it half-baked toy, uh, I think might be giving, uh, Apple and Siri a little bit too much credit. So here's where it gets interesting. Uh, so it seemed like according to the report, if you're reading between the lines, and we're going to be sharing that report in today's newsletter if you do want to read it. So, uh, it seemed like Anthropic was kind of a preferred vendor for this, maybe over OpenAI, which I found interesting. But again, that was me inferring and reading a little bit between the lines. And again, this is according to unnamed sources. But again, this Bloomberg reporter is stellar in his reporting. But it says that Apple is facing unprecedented costs for external dependency on their core feature. And the financial pressures right now are forcing parallel backup negotiations with OpenAI because right now it seems like Anthropic and Apple are kind of— might not be able to come to an agreement on pricing because right now Anthropic is reportedly saying that this would require a multi-billion-dollar yearly investment from Apple and it would go up exponentially year over year. So, you know, reportedly Anthropic is like, yo, this is going to cost you many, many billions of dollars and it's going to get very expensive. Apple reportedly didn't like that. So they're also talking with OpenAI. So we'll see what actually happens here. And it also is worth noting that Anthropic does have a similar kind of deal with Amazon Alexa. Obviously, Amazon is a huge investor in Anthropic, so that one makes sense a little bit more in terms of, okay, that's an obvious partner or an obvious vendor to take over. But, you know, Amazon kind of came to that realization as well. And they're like, yeah, we're going to use Anthropic to power their new Alexa Plus service, which it's slowly rolling out. I think the latest report said that that there were a million people who received access to this so far out of, I believe they have hundreds of millions of Alexa users worldwide. So it's only a very, very small portion, but it can be done. But will it be done? Because when you think about the demands that Apple is reportedly making, right, in terms of making sure that this works on Apple's private servers. Again, I'm not an AI engineer, but I do presume that would be fairly difficult to do. And I would guess that's probably one of the reasons that Apple hasn't been able to accomplish this internally. That and they're really not investing in their AI teams, right? You've seen, you know, yesterday we talked on the you know, weekly AI news that matters segment, just how much money Meta is investing by building their new superintelligence lab. I believe it was called the MSL, Meta Superintelligence Labs, led by former CEO of Scale AI, Alexander Wang. And they just have a bunch of former OpenAI researchers, former Apple researchers, former Google DeepMind researchers, like Meta is saying, hey, we're not competing at the level that we want to in generative AI with large language models. We're going to go spend billions of dollars. Yeah, there was a, I believe it was a $14 billion acquisition or, you know, acquihire essentially for 49% equity in Scale AI. Yet companies like Apple that are literally Scrooge McDucking sitting on piles of cash right? Literally sitting on piles of cash and they can't invest, like they're not investing in AI talent like the other AI labs are. So it's, it's no surprise to me that Apple has failed, uh, internally, uh, to build a team. And it wouldn't surprise me if Apple even isn't able, uh, to negotiate a deal because guess what? Now, uh, analysts, uh, are, are gonna get wind of this, obviously, that it's, uh, been out now for about a half day in Bloomberg so far. So we'll see how the market reacts. But what this does create is it creates pressure on Apple now to finalize a deal, uh, that number one, they're comfortable with, but makes sense fiscally. And I don't know, right, if we're saying that Anthropic is asking for multi-billion dollar annual partnership that is going to hockey stick year after year, it doesn't seem like they're at a point where they still might be able to hit that, you know, 2027 deadline, right? Imagine if we get another 2 years. Imagine if we get to 2028 and Apple still has like hardly no, uh, you know, generative AI in their devices, right? Or if they're like, now you can create, uh, you know, uh, Genmoji movies, right? No, no one wants that, right? We want for Apple users, you want a smart Siri and you want a powerful edge AI device that actually runs AI, right? Not just has the capabilities to do it. So Apple has already demonstrated that they can't do it on their own. This is an epic failure. So how the heck do we get there? How, how did Apple go from, again, the world's most powerful, uh, profitable, uh, most valuable company to now just on the downslide, right? And there's probably a reason why a lot of the top AI talent in the world doesn't want to work for Apple. Again, look at their laughing stock, you know, AI research paper that they put out a couple of weeks ago. Any serious AI researcher reads that and it's just like, yeah, it's like, it's a facepalm, right? No one can take Apple seriously when it comes to AI, which, is problematic in many, uh, in many regards. Number one, it's problematic because their consumer-facing products are going to clearly lag behind and they're going to have to just hire a competitor or open up, uh, it to third-party, uh, developers. And hopefully third-party developers will just be able to create great apps that can take advantage of these capabilities. But number two, think about the long run. Right? If the future of innovation is AI, which I strongly believe it is, and if you're listening to this podcast or livestream, you probably are under that realization as well. This does not bode well for Apple's future. If you cannot When it comes to AI, it's all about trust. And the same thing can be said for how you operate your business and accept payments from your customers. Whether you're sending invoices on the go from your laptop, needing business management solutions, or trying to open another location for your local business, it's all about having the right tools that people trust. That's where Square has your back. Running a business means making 100 tiny decisions a day, and Square helps make those decisions smarter, Easier and more efficient. 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That's why we created the Start Here series, an ongoing podcast series of more than a dozen episodes you can listen to in order. It covers the AI basics for beginners and sharpens the skills of AI champions pushing their companies forward. In the ongoing series, we explain complex trends in simple language that you can turn into action. There's 3 ways to jump in. Number 1, go scroll back to the first one in episode 691. Number 2, tap the link in your show notes at any time for the Start Here series, or you can just go to starthereseries.com, which also gives you free access to our inner circle community where you can connect with other business leaders doing the same. The Start Here series will slow down the pace of AI so you can get ahead. Build the most important aspect of your company in-house and you're having to pay your competitors to do it for you. That is a sure signal of a company that is going to slide for years to come unless they do something drastic, right? Something like even more drastic than what, uh, Meta has done over the past month or so by spending, uh, you know, tens of billions of dollars on acquisitions and spending reportedly $100 million plus annual salaries for individual researchers, which I don't see Apple doing. Apple's no longer aggressive. They're a dinosaur when it comes to innovation. And this is essentially, you know, there's a lot of reasons, but I think there's also internally, there's this legendary, uh, now in a bad way, secrecy, uh, in Apple, right? There would be entire departments that would exist for years that other senior leadership in Apple would have no clue about. That doesn't work anymore. Right? You can't be working in secret silos anymore, uh, because your AI needs to be ingrained in your company's DNA. And that Apple perfectionism prevents iterative improvements, uh, approach that AI models require. Right? AI models are not perfect. They need to be constantly, uh, updated and improved. That is not in Apple's DNA. And we've already seen, uh, you know, 2 or 3 years of essentially broken promises as rivals race ahead. Speaking of rivals, let's talk about Google. They did it right. They, they went off to a pretty shaky start. If you remember back to their December 2023 unveiling of their Bard large language model, didn't go very well. They recovered. Now, I'd say without a doubt, they are the hottest AI name in the world since, uh, probably December of 2024. So the last 6 or 7 months, I don't think most people would argue that Google has been number 1 in the AI space, or at least in that 1A, 1B with OpenAI. And they successfully integrated their edge AI across the Android ecosystem. So they proved it could be done with some highly capable small language models, the Gemma family of models from Google that runs their, uh, different, uh, AI smartphones are absolutely amazing. And also, Meta is poaching also Apple's talent, whatever was left, uh, right? So there's not a lot that I think Apple can do to recover because all they've done is shiny marketing that's led to, uh, class action lawsuits and research papers that have been widely debunked and ridiculed in the AI research community. There's no longer innovation at Apple, which is what they have been historically known for. So here's the hot take. This partnership, if it— if this turns out to happen, right? So this could actually be— these talks could be happening right now, and obviously Apple could pivot again if they can't work something out with Anthropic or OpenAI, and still might be able to figure this out internally, you know, by 2027, which is laughable, right? But I don't think so. I think this is the beginning of the end for Apple being an innovator in the most important technology, because the most important technology in the world right now isn't smartphones, they're not AirPods. It is generative AI. And this is the first time that Apple has gone through a major outsourcing of a core intelligence technology in the company's history. Yeah, they partnered with other people. They've acquired other companies and brought them under the Apple umbrella. But this is the first time that Apple has gone through essentially a core piece of technology for their company that they're outsourcing it, right? If this does if these reports, uh, are kind of, uh, come to fruition. And this is a public admission that their Apple's famous vertical integration strategy is failing. They're— it's— Apple is failing. And this is, I think, creating a long-term dependency on external AI providers that a company the size of Apple should not have. Speaking of the size of Apple, I talked about this a couple of weeks ago, but when you look at before generative AI, right? So when you look at, um, and for our livestream audience, I have a little screenshot on my screen here, um, before the, the generative AI boom, right? So if you go back like 5 years, um, Apple was crushing everyone in terms of market cap, right? So, uh, that's the most valuable company in the world. Apple was the most valuable company in the world with a $2.1 a $2.13 trillion market cap. Microsoft was fairly far behind, uh, with a $1.6 trillion market cap. Fast forward to today, Apple is third, right? And their competitors, some of their closest competitors like Microsoft and Alphabet/Google, uh, they've grown at a much faster rate. Than Apple has. And I think one of the main reasons is because of every other company's investments and results and outputs in generative AI, right? When you look at the, the other most valuable companies in the world today, Nvidia, Microsoft, Apple, number 3, 4, Amazon, 5, Google. Apple and 6, Meta. Guess what? The other 5 companies aside from Apple have created measurable, invaluable generative AI output in-house, right? NVIDIA with their GPUs, they power the AI revolution. Microsoft with its Copilot technology. Amazon in a lot of different ways, even just aside from AWS and providing infrastructure, but they have their own set of Nova models. In their Bedrock platform that I think has been very popular. Like I said, Alphabet/Google with Gemini 2.5 Pro is the best model in the world, at least right now, and it's not necessarily close. And then Meta, even though I'd say their Llama 4 underperformed, they've invested more in the past week in their future AI than I think just about any company has over the course of like a 2-year span. What Meta has done over the past few weeks is unprecedented. Yet you have Apple reportedly not really doing anything aside from trying to cast shade on the entire large language model ecosystem, uh, with some not good research, um, and hiring their competitors to do the AI for them. The future of work, just the future of our lives. Is generative AI in the same way that, you know, you could say right now most of our lives revolve around or are dependent on the internet or maybe social media for bad reasons, right? The same is going to be true and is already proving to be true for generative AI. The future of work, the future of our personal lives is ingrained in and around generative AI. And Apple has signaled, I think, with this, that they are absolutely cooked. And I would not be surprised, and I said this on a previous show, someone go ahead and bookmark it. Uh, I will say in 3 or 4 years, uh, I do think that 2 of the 3 companies there, uh, Amazon, Google, and, uh, Meta, I do believe 2 of those 3 and maybe all 3 of them will pass Apple when it comes to market cap. Cap, because this is a lagging impact, right? Uh, the market, I think, is not going to really correct itself on Apple probably for another year or two when they see just how consequential Apple's generative AI failures are, right? When, when, you know, when large language models become like, you know, a computer screen, right? They become that pivotal for every single person who's doing work. It's like, oh, you can't do work without AI, right? We're not there yet, but we're going to be there soon. And guess who won't be there with their own pocketbook? At least Apple, because they're paying other people to be there for them, which makes everyone else's, uh, value go up and their value go down. So the verdict, this is the latest Apple AI crisis. And I'm putting my stamp on this one. This proves Apple's innovation era is over. All right. This company has transformed, transformed, right? When Siri first came out, it was a very impressive piece of artificial intelligence. It's barely improved in the decade or so it's been out, right? And now because of their constant AI failures, they're forced to make their competitors richer and not get the valuable data that you would get by putting your own models out there for hundreds of millions, or in Apple's cases, billions of users, right? There's billions of Apple devices out there. That's another thing you can't overlook. Apple is not going to have— well, I mean, we'll see what the actual arrangements are, but presumably they're not going to have as much data as they would if they had their own large language models out there. That's why, like, AI success has all been about users, right? Which is why some companies like OpenAI, I think, are fine with losing money because they're gaining the valuable data, which helps them make more and better models. And I think the cultural and technical failures expose that Apple is officially cooked on generative AI. All right. You heard it here first, y'all. Hot Take Tuesday. I hope this was helpful. If so, if you're listening on the podcast, reach out, right? I always put my contact information, email address in the show notes. Reach out if you could. Subscribe and follow the show. I'd really appreciate that. Leave us a rating on Spotify or Apple. Podcast if you could. If you're listening on the live stream or anywhere else, appreciate your support as well. And please go to youreverydayai.com, sign up for the free daily newsletter. We're going to be recapping the highlights of today's show as well as keeping you up to date with everything else to be the smartest person in AI at your company. Thank you for tuning in. Hope to see you back tomorrow for Putting AI to Work Wednesdays and every day for more Everyday AI. Thanks, y'all.

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