Apple (NASDAQ: AAPL) has moved to force settlement negotiations with Epic Games, filing a motion Thursday to compel a court-ordered conference before Magistrate Judge Joseph C. Spero. The move aims to resolve remaining disputes over App Store rules and fees without further litigation.

The filing comes after the US Supreme Court rejected Apple's request to pause lower-court proceedings while it considers an appeal against a contempt finding by Judge Yvonne Gonzalez Rogers. That finding stemmed from Apple's failure to comply with a 2021 injunction requiring the company to allow developers to direct users to external payment systems.

Commission Dispute Details

Apple had previously sought to impose a 27% commission on purchases made through external payment systems, triggering the contempt dispute. Separately, the company submitted a proposal outlining a framework where it could collect commissions of up to 15% on transactions processed through alternative payment systems in the US.

Epic immediately objected to this proposal, arguing that the proposed fees exceed what the Ninth Circuit has indicated Apple can charge for external purchases. The current settlement motion is distinct from the commission proposal; it does not present a specific offer but asks the court to facilitate confidential negotiations between the two sides.

What the Numbers Show

The divergence in commission proposals highlights the core friction point: Apple's proposed 15% fee for external transactions versus Epic's stance that such rates violate Ninth Circuit guidance. This gap underscores the difficulty of reconciling Apple's revenue model for alternative payment processing with judicial limits on platform fees, suggesting that any settlement will require significant compromise on the effective take rate for third-party transactions.

The case originates from Epic’s 2020 lawsuit challenging Apple’s control over iOS in-app payments. While Apple largely won the underlying case, the subsequent injunction mandated changes to its payment policies. Apple and Epic attorneys discussed the proposed settlement conference on August 11, but Epic had not agreed to the request prior to the filing.

Apple Inc. (NASDAQ: AAPL) has reportedly partnered with Alibaba Group Holding Ltd. (NYSE: BABA) to create an AI model specifically designed for the Chinese market. This marks a significant shift in Apple's artificial intelligence strategy, as it moves away from relying solely on third-party models to power AI features within the country. The collaboration aims to bring generative AI features to Chinese iPhones, where global models like ChatGPT and Claude are unavailable.

According to three people familiar with the matter, the decision to train a proprietary model represents a departure from Apple's broader global approach. By working directly with Alibaba, a major Chinese technology giant, Apple seeks to tailor its AI offerings more closely to local regulatory and market requirements while exercising greater control over the AI-equipped devices it sells in China. The sources declined to be named due to the sensitive and non-public nature of the information.

Strategic Shift in AI Partnership

This is the first time that Apple is training its own China-specific AI model rather than relying solely on local partners. The move aims to help Apple maintain competitiveness in the Chinese smartphone market, where it has been losing traction to domestic rivals like Huawei. Reuters reported that this development follows Apple receiving Chinese regulatory approval for Apple Intelligence in July, ending a wait that began with the feature's launch in 2024.

China's cyberspace regulator approved Apple's generative AI services alongside AI offerings from Huawei, Xiaomi, Vivo and Oppo. Alibaba said its Qwen AI will be integrated into Apple Intelligence across iOS, iPadOS, macOS and visionOS for users in China. This partnership highlights the increasing importance of localized AI solutions in navigating complex regulatory environments while delivering competitive consumer features.

Key Developments

• Model Development: Apple trained a China-specific LLM with technical support from Alibaba Group.
• Strategic Control: The in-house trained model provides Apple with enhanced oversight over AI functionalities on devices sold in China.
• Future Rollout: A suite of AI tools powered by this model is expected to launch in the coming months, potentially coinciding with new iPhone launches in September.
• Regulatory Context: Apple Intelligence received approval in July after a two-year wait, following brief appearance on Chinese iPhones in March that triggered scrutiny.

What the Numbers Show

The integration of Alibaba's Qwen AI, particularly its Qwen3.8 Max-Preview model with 2.4 trillion parameters, into Apple's ecosystem represents a significant technological commitment. This model is considered comparable to leading frontier AI models, second only to Anthropic's Claude Fable 5. The dual-track approach to AI implementation could position Apple as the first foreign company to receive Beijing's approval to offer a proprietary AI model in the country, potentially circumventing the regulatory hurdles that have hindered many other U.S. tech firms in China.

Reuters also reported that earlier this month, Apple published then deleted a guide showing eligible Mac users in China how to connect Alibaba's Qwen AI with Siri and Writing Tools, potentially boosting its position in China's AI PC market. Apple and Alibaba did not immediately respond to requests for comments.