Apple Forced Into Drastic iPhone 16 Pro Downgrade

Update September 17 with details on iPhone 16 pre-order volume and the rollout of Apple Intelligence.

With the launch of the iPhone 16 and iPhone 16 Pro, Apple has taken its first steps into the next generation of smartphones, but Tim Cook and his team won’t be able to deliver the benefits to everyone who wants them.

Thanks to the impact of the European Union’s Digital Markets Act, Apple has taken the drastic decision to remove its generative AI software suite—the clunkily backronymed Apple Intelligence—from every iPhone 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.

Update: Monday September 16: Writing for the Power On newsletter, Mark Gurman confirms the rollout of Apple Intelligence across the iPhone platform, including all four iPhone 16 models but also the iPhone 15 Pro and 15 Pro Max.

The first public release of Apple’s generative AI tools will take place in October and consist of only a few features. The first notable release will be in December, including emojis created from generative AI routines, image editing capabilities, and the first use of ChatGPT.

The complete integration throughout iOS 18, including Apple INtelligence working within the voice-activated Siri digital assistant, will not occur until March 2025.

Of course, European iPhone users will see none of these upgrades, whether they are existing iPhone 15 Pro owners or those who buy any one of the four new iPhone 16 family.

Update: Tuesday September 17: Details on the iPhone pre-orders come from noted Apple analyst Ming-Chi Kuo. Writing on Medium.com, Kuo notes overall pre-orders in the region of 37 million units over the iPhone 16, 16 Pro, 16 Pro, and 16 Pro Max models, around 12.5 percent down on the iPhone 15 numbers from last year’s pre-order window.

Crucially, Kuo cites the lack of Apple’s generative AI software at launch as contributing to the smaller order book; “ One of the key factors for the lower-than-expected demand for the iPhone 16 Pro series is that the major selling point, Apple Intelligence, is not available at launch alongside the iPhone 16 release.”

Kuo notes that Apple Intelligence will arrive later in the product cycle and be accompanied by aggressive marketing throughout 2025. That will be effective in Apple’s home territory of the United States but ineffective in its second-largest market of Europe as long as Apple Intelligence remains out of reach of potential European customers.

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.

Now read the latest iPhone, AirPods and Apple Watch headlines from Glowtime in this week’s Apple news digest, here on Forbes…