Apple Risks Falling Even Further Behind on AI

Pivot 5
June 02, 2025

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Apple’s WWDC 2025 Set to Expose Its AI Lag Behind Rivals

Apple will use its June 9 WWDC to let third-party developers run apps on its 3-billion-parameter on-device foundation models. Insiders say that incremental move is the conference’s only significant AI addition.
Apple Intelligence, unveiled last year, landed late and underpowered, with its upgraded Siri still delayed indefinitely. Google’s I/O advances and OpenAI’s headline partnership with Jony Ive have intensified comparisons and left Apple’s lineup looking dated.
Employees call 2025 a gap year and admit the stance is risky because rivals are “moving at light speed.” Sources worry the muted keynote will make Apple’s AI shortcomings even more obvious to developers, consumers and investors.

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Wall Street Journal reporter Keach Hagey released “The Optimist,” a biography of Sam Altman that spotlights OpenAI’s shaky governance and his brief ouster. She told TechCrunch the episode proved the company’s nonprofit-controlled for-profit structure is “not stable”.
With OpenAI retreating from plans to give its for-profit unit more sway, Hagey said the “fundamentally unstable arrangement” will keep backers wary. She stated that the capital-hungry firm could “absolutely” face funding trouble despite Altman’s deal-making talent.
The drama, nicknamed “the Blip,” showed how Microsoft and nearly all staff overruled the board without formal voting rights. Hagey said that raw power dynamic signals why investors remain unsettled today.

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Grammarly secured $1 billion in non-dilutive financing from General Catalyst to broaden its AI-powered communication tools. The cash targets sales, marketing, and strategic acquisitions as the company evolves into a full productivity platform.
General Catalyst takes no equity; instead, it earns a capped return tied to revenue generated from the deployed capital. Grammarly posts over $700 million in annual revenue and was last valued at $13 billion in 2021.
Redirecting external money to customer acquisition lets Grammarly shift its own budget toward new product development, speeding its platform push. The transaction showcases General Catalyst’s Customer Value Fund model of backing late-stage AI firms without taking additional equity.

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AI-generated personas are racking up followers and high-profile sponsorships, with CGI stars like Imma and Aitana fronting campaigns for Coach, Porsche, BMW, SK-II, Amazon Fashion, and H&M. ABC News details how these “virtual humans” operate across Instagram and other platforms, blurring the line between fiction and marketable celebrity.
Snapchat creator Caryn Marjorie earned $70,000 in one week by charging $1 a minute for chats with her Caryn AI clone before shutting it down over false statements and disturbing user interactions. Marketing firm The Clueless says brands prefer AI avatars because they avoid costly photo shoots, travel, and scheduling conflicts.
Marjorie now employs bodyguards and says she must “over prove” her humanity to stay competitive, illustrating new safety and credibility pressures on real influencers. Agency executives note that AI models work 24/7 without logistical hurdles, giving advertisers a low-risk, high-control alternative to live talent.

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Early AI investor Elad Gil is now targeting the acquisition of mature, people-intensive businesses to overhaul them with generative AI. He has already backed two companies pursuing this roll-up strategy, including one-year-old Enam Co., which investors value at more than $300 million.
Gil says owning the underlying firms lets him push gross margins from roughly 10% to 40% by automating repetitive tasks. The widened cash flow, he argues, lets roll-up operators pay higher prices for further deals and scale faster than traditional buyers.
After hands-on testing of AI tools, Gil sees the competitive field narrowing to a few frontrunners in sectors like legal, healthcare, and customer support. His portfolio bets Harvey, Abridge, and Sierra AI sit in those lanes, reinforcing his view that market winners are already crystallizing.

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