CUPERTINO, Calif. — Nasdaq brought its market open festivities to Apple’s sprawling Silicon Valley headquarters on Tuesday, the eve of the company’s 50th birthday.
From a desk inside Apple Park, the ring-shaped campus that Steve Jobs spent his last years helping design, Tim Cook rang the opening bell and, in the process, ushered in the iPhone maker’s second half-century.
It was a celebratory occasion, but one arriving at a pivotal point for an iconic American company that faces major challenges today and in the years ahead as the technology industry gets swept up by artificial intelligence.
Prior to the AI boom, which started with the launch of OpenAI’s ChatGPT in late 2022, Apple was able to win by dominating the consumer device market and adding its Siri voice assistant across its product portfolio.
The pitch has always been simple: Pay a premium for a device, and trust that what happens on it stays yours, whether it’s messages, photos or notes. Personal data isn’t fuel for an advertising engine.
Two of Apple’s megacap tech peers took the opposite approach. Google and Meta are the giants of digital advertising, giving away their key services for free and making tens of billions of dollars a year in profit by targeting users with promotions.
Apple’s principle came from Jobs, its co-founder and longtime CEO. Cook, his successor, has been preaching it since becoming CEO in 2011, shortly before Jobs’ death. For much of Apple’s 50-year history, it’s been gospel in Cupertino.
That’s why Apple’s latest move feels so out of character.
In January, Apple struck a multiyear deal to use Google’s Gemini AI as part of a rebooted Siri. Google has already been paying in the range of $20 billion a year to be the default search engine on the iPhone. In AI, that relationship flips: Apple becomes the one paying for the underlying intelligence by licensing Google’s technology.
Money isn’t the main issue — Apple recorded net cash of $54 billion in the latest quarter and returned $32 billion to shareholders, mostly through buybacks. Rather, the concern, according to Asymco analyst Horace Dediu, is what the arrangement with Google means for user data and whether the search company uses it to bolster its algorithms.
“That’s where the wall has to be,” Dediu said. “That they don’t give that information to Google, and Google doesn’t get smarter and improve its core business because Apple is sharing information with them.” He added that, “To the extent that the intelligence improves, that should stay within Apple.”
Apple declined to make anyone available for this story, but CNBC spoke with former employees and people who spent decades studying the business. The general sentiment is that Apple is at a crossroads, caught between the ethos that shaped the company and a technological shift that’s forcing it to compete on unfamiliar ground.
Apple is in this quandary in part because, compared to its tech peers, the company has been slow to AI. The long-awaited AI update to…
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