Transcript: Can Apple catch up in the AI race?

This is an audio transcript of the FT News Briefing podcast episode: ‘Can Apple catch up in the AI race?’

Marc Filippino
Good morning from the Financial Times. Today is Tuesday, June 11th, and this is your FT News Briefing.

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Apple’s trying to catch up in the AI race. And private equity, it’s really digging US accounting firms. Plus, French President Emmanuel Macron’s move to call snap elections is really giving go big or go home vibes.

Leila Abboud
The far right has never come to power in France outside of wartime, world war two. This is unprecedented if it were actually to happen.

Marc Filippino
I’m Marc Filippino and here’s the news you need to start your day.

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Artificial intelligence, this. Artificial intelligence, that. AI has really been the hot tech story of the past year. But Apple has not been a part of the narrative. Yesterday, the company tried to change all that.

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Apple kicked off its Worldwide Developers Conference with news that one, the iPhone will host a whole bunch of new AI features. And two, the company is gonna partner with OpenAI. I’m joined now by the FT’s Richard Waters to talk about Apple’s announcements. Hi, Richard.

Richard Waters
Marc, good to talk to you.

Marc Filippino
Good to have you back. So, walk me through the big announcement.

Richard Waters
So Apple’s vision of AI that they call “Apple Intelligence” seem to be quite a modest idea at this point. And what they basically said was, look, we’ll give you a more powerful Siri. This is the voice powered assistant that has been on the iPhone for more than a decade but really hasn’t developed for many years. And this new Siri will find things on your phone, it’ll be able to control your phone. So an example of that is, you know, you’re meeting someone at the airport instead of needing to go to an email to remember what flight number it is and then go to, you know, your maps app and find what the traffic is like to drive to the airport, you’ll just be able to say to Siri, you know, when’s that flight getting in? What’s the best route? And hopefully if it delivers, it’ll be able to give you an integrated answer. And then there was also a lot of anticipation about what Apple was gonna do with OpenAI.

Marc Filippino
Yeah, tell me a little bit more about that one, Richard.

Richard Waters
It was actually fairly low-key. Apple said, you know, we will let you ask Siri to ask a question about OpenAI. And so the obvious question here is, well, why would you do that? Why wouldn’t you just ask Siri to answer that question? And I think this really highlights how good is Apple at AI. How much is it gonna rely on letting its users go outside Apple to tap into OpenAI and other models they promised in future? And it’s a real sign, I think, of technology weakness. Yesterday it said very little about what its capabilities are in large language models, which is an area it’s been behind in, and it really needs to prove that it can get up to speed and can start really powering some AI type experiences, as well as Google or Microsoft or indeed OpenAI.

Marc Filippino
So Richard, yesterday seems a bit like a mixed bag. As you pointed out, Apple is behind on these big players. Investors weren’t especially thrilled with the news. Apple’s share price ended the day down around 2 per cent, but this is still a big moment for the company. I guess, you know, what’s your main takeaway from yesterday?

Richard Waters
Well, I think one of the interesting things here is that although Apple has been behind, nobody else has really defined why consumers are really gonna want generative AI on a smartphone. And so the ground was, to some extent, open for Apple to come in and define. And I think it did a pretty good job here. It basically said look we’re gonna call it Apple Intelligence. It’s gonna do a few things for you. It’s gonna be very personal. It’s gonna be private. It’s gonna keep all your data very secret. It’s gonna integrate with all of your existing apps, it’ll just make everything work a little better. And over time, it’s gonna get quite capable and do more things for you. So I think in areas like this, you know, Apple is laying the groundwork for hopefully something better in the future, but we don’t know when or how capable Apple will be. It hasn’t really given much of a sense of when it will actually deliver that full kind of vision.

Marc Filippino
Richard Waters is a tech writer at large for the FT. He covers all things tech. Thanks, Richard.

Richard Waters
Good to talk to you.

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Marc Filippino
Private equity is buying out more and more US accounting firms. Sources tell the FT that ten out of the top 30 American accounting firms could be owned by PE soon. That’s after private equity already bought big names like Grant Thornton and Baker Tilly earlier this year. Partners at these accounting firms stand to make a lot of money from the deals. But regulators are worried. They think that PE ownership could affect the quality of a firm’s audit work, something which has already been under the microscope lately.

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French President Emmanuel Macron is having a very bad start to the week. His centrist alliance got absolutely walloped by the far right during European elections.

News clip
[Emmanuel Macron speaking in French]

Marc Filippino
Macron’s party did so badly that he dissolved parliament and called for snap elections in France. He said on Sunday that the people should choose the direction of the country.

News clip
[Emmanuel Macron speaking in French]

Marc Filippino
The move shocked everyone and now a lot of people are asking what was Macron thinking? The FT’s Leila Abboud has been looking into it and she joins me now. Hi, Leila.

Leila Abboud
Hello.

Marc Filippino
So first things first, just explain the dynamics going into this election. Macron is not up for election but members of parliament are. So what happens next?

Leila Abboud
So under the French system, the president has the power to dissolve parliament at any time. And it’s very rare, it hasn’t happened in 30 years. And what will happen now is that there’ll be a legislative election and the format is two tours. So the first vote will be on June 30th. The second one will be on July 7th. And you basically have these like run-offs, so there’ll be fewer candidates 2 or 3 in the second round. It’s actually quite difficult to predict how it will turn out because there are sort of 577 local races, but with national implications that can shift and make things sort of unpredictable.

Marc Filippino
Got it. And who are the major players?

Leila Abboud
You have Macron’s centrist alliance, which is made up of his party, that’s called Renaissance. And then two parties that he’s allied with. Then you have the RN, the Rassemblement National, which is the far-right party led by Marine Le Pen. They are the biggest single opposition party in parliament now, they have 88 MPs. They have momentum. And that European election result on Sunday, which showed them at almost 32 per cent, is just an unprecedented number for her party.

Marc Filippino
Even with that being the case, it’s still pretty difficult right now to know who has the upper hand. So how big of a gamble is this election for Macron? I mean, what are some of the risks?

Leila Abboud
I’d say that there is a non-zero risk that the RN will do quite well and pick up a lot of seats. And then you only have one question, which is can they get an outright majority? If they get to that level, de facto they get to pick the prime minister. And then you go into a system where Macron is still president, but the RN is in the prime minister’s office. The president is basically to simplify, runs foreign affairs, the commander-in-chief of the armies and represents France abroad. But the PM and the government are the ones who run domestic affairs. So it’s very weird to have two politicians sitting in those chairs that are so diametrically opposite, right? Also, we got to keep in mind the far right has never come to power in France outside of wartime, world war two, when there was a military loss and you had a Vichy government. This is unprecedented if it were actually to happen.

Marc Filippino
OK, so it sounds incredibly risky for Macron, but is there any scenario where this could go well for him?

Leila Abboud
There is a slim scenario where it could go well. He’s generally sort of in his political DNA and his character, he is a risk-taker and he likes to be in control. And by choosing the moment where he dissolves parliament, he snatches back a little bit of control over the calendar. So he may be thinking that the voters are not really gonna want to send Marine Le Pen and the RN to power, and that there may be a way for him to eke out second place with his centrist alliance, and then maybe team up with one of the other parties, not the RN, obviously, to form a government. If he was able to do that, he would kind of outflank the RN in order to keep the prime minister’s office and run the government with the help of another party. That would be the best-case scenario, I think, for him.

Marc Filippino
Leila, this in some ways sounds a lot like the gamble that David Cameron made back in 2016, when he asked the people to vote, whether or not they wanted to leave the European Union. And of course, we know how that ended. We got Brexit out of it. Could this move backfire for Macron the same way it backfired for then Prime Minister David Cameron?

Leila Abboud
I think the example of David Cameron’s decision to call the Brexit vote is like a cautionary tale for Macron. He’s gonna hope very, very, very hard that he does not end up in the position that David Cameron ended up, which was totally regretting the fact that he even called the vote. If his decision to call early elections now ushers in an RN prime minister, it will be a major part of his legacy and like in the first few lines of his obituary when he dies as David Cameron’s legacy will always be marked by that fateful decision on Brexit.

Marc Filippino
Leila Abboud is the FT’s Paris bureau chief. Thanks, Leila.

Leila Abboud
Thank you.

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Marc Filippino
You can read more on all these stories for free when you click the links in our show notes. This has been your daily FT News Briefing. Make sure you check back tomorrow for the latest business news.