With the introduction of the iPhone 16 and iPhone 16 Pro, Apple has taken the first steps into the next generation of smartphones, but Tim Cook and his team will not be able to offer the benefits to everyone who wants them.

Due to the impact of the European Union’s Digital Markets Act, Apple has made the drastic decision to remove its generative AI software suite – which goes by the clumsy backronym Apple Intelligence – from every iPhone in Europe. Without clear instructions from regulators, the company is refusing to make the software available to its European user base.

Europe has seen stable iPhone sales over the past 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 U.S. sales. The loss of the European market to Apple Intelligence will have no immediate impact; the software, when available, will support a minimal number of languages, with the first update limited to U.S. English and parts of the suite delayed until the first quarter of 2025.

Nevertheless, Apple is now at a disadvantage because of the decision.

Companies like Google Gemini AI and Samsung Galaxy AI can get ahead of the game here by collecting mountains of anonymized user data to improve the product and offering continuous updates to the existing software while working on the release of the second generation of software. Gemini AI was introduced with the launch of the Pixel 9 family in August, while version 2 of Galaxy AI is expected in January 2025.

Apple can’t do any of that, at least not with its European user base.

Generative AI is currently one of the driving forces behind smartphone purchasing decisions. According to a recent survey by CNET, 34 percent of users have privacy concerns about AI. Apple has a strong brand identity built in part on the promise of privacy, and is betting heavily on it to differentiate its AI from that of its competitors.

Because of the dominant role that the iPhone and iOS play in the European market, the EU has designated Apple as a gatekeeper. In the EU, Apple must allow third-party companies to work with its services. This essentially requires the company to break down the closed space around these core services and allow competition and user choice on the platform.

Apple has previously stated: “…due to the regulatory uncertainties caused by (the EU’s Digital Markets Act), we do not believe we will be able to roll out three of these features – iPhone mirroring, SharePlay screen sharing extensions, and Apple Intelligence – to our EU users this year.”

Would Apple Intelligence fall under the DMA’s gatekeeping requirements? If so, this would force Apple to open iOS to work with other generative AI software solutions and give users the choice of which 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 given to date.

Apple has decided to get around the problem by refusing to install its generative AI software on purchased iPhones. It’s a drastic decision that is seen by Apple’s dedicated community as a downgrade, putting European iPhones at a disadvantage compared to Android-based competition.

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