Apple forced into drastic iPhone 16 Pro downgrade

As Apple takes its first steps into next gen smartphones with the launch of the iPhone 16 and 16 Pro, they will not, the rollout of Apples new AI features will be unavailable in the EU due to privacy concerns, says Forbes.

The European Union's Digital Markets Act has caused Apple to remove its "Apple Intelligence" generative AI software from all iPhones in Europe.

It refuses to release the software to the European user base without clear guidance from the regulatory authorities.

Europe has seen steady sales of the iPhone over the last three years; 56.1 million units in 2021, 56 million in 2022 and 56.8 million in 2023. That's between half and two-thirds of US sales. The loss of the European market to Apple Intelligence will not have an immediate impact; the software will support a minimal set of languages when available with the first update limited to US English, and sections of the suite delayed until Q1 2025.

Nevertheless, the decision leaves Apple at a disadvantage today.

The likes of Google's Gemini AI and Samsung's Galaxy AI can push ahead, gathering mountains of anonymized user data to improve the product as well as offering continual updates for the existing software while working to release the second-generation software. Gemini AI rolled out with August's launch of the Pixel 9 family, while v2 of Galaxy AI is expected in January 2025.

Apple can do none of this, at least with its European user base.

Generative AI is one of the current driving forces in smartphone purchasing decisions. A recent survey by CNET suggests that 34 percent of users have privacy concerns around AI. Apple has a strong brand identity that is, in part, built around the promise of privacy and is leaning into this heavily to try and differentiate its AI from that of the competition.

Due to the dominant role that the iPhone and iOS has in the European market, the EU has labelled Apple as a gatekeeper. In the EU, Apple must allow third-party companies to work with its services, essentially removing the walled garden around these core services and allowing competition and user choice into the platform.

Apple has previously stated that "...due to the regulatory uncertainties brought about by [the EU's Digital Markets Act], "we do not believe that we will be able to roll out three of these features—iPhone Mirroring, SharePlay Screen Sharing enhancements, and Apple Intelligence—to our EU users this year."

Would Apple Intelligence fall under the gatekeeping requirements of the DMA? If so, this would force Apple to open up iOS to work with other generative AI software solutions, giving users the choice of AI software they want to use on their personal devices. Apple is seeking clarity on the interaction between Apple intelligence and the DMA, clarity that has not been forthcoming.

Apple has decided it will avoid the issue by refusing to allow its generative AI software to be installed on a purchased iPhone. It's a drastic choice that will be seen as a downgrade by Apple's dedicated community and leave European iPhones at a disadvantage compared to the Android-based competition.