Apple’s latest iPhone announcement signals the start of a two-track future

Apple announced on Monday a souped-up iPhone 16 that boasts an all-new A18 chip that is 30% quicker than the previous generation, as well as a range of AI-powered tools through the company’s branded Apple Intelligence program—including “computational photography” and visual intelligence, its version of Google Lens.

“We are thrilled to introduce the first iPhones designed from the ground up for Apple Intelligence and its breakthrough capabilities,” Apple CEO Tim Cook said at the event.

But it’s a little-hyped rift in how different jurisdictions worldwide treat the tech giant that could have the largest stakes for the iPhone maker going forward.

This year’s event marks the start of a global divergence between iPhone users in Europe and the rest of the world, as regulatory requirements start to bite Apple. The fear is that while iPhone users around the world can access a full-bore Apple device experience, users in Europe will get an iPhone with different App Store options, no embedded AI, and changes that take the shine off the famously seamless Apple experience.

In January, Apple was forced to accept it would have to offer users access to alternative app stores after allegations from European regulators that the company was anti-competitive and in breach of the bloc’s Digital Markets Act. As a result, there are questions over whether other key features Apple touted at the event as coming in beta mode next month will make their way to Europe in a timely manner, too.

“The European version will see cracks in Apple’s walled garden to satisfy EU regulators,” says Dipanjan Chatterjee, vice president and principal analyst at Forrester. “Customers can access third-party app stores and other non-Apple services like payment platforms on this new iPhone.”

Some worry that the European-mandated changes, which have been implemented under the guise of empowering users by giving them choice, may just confuse them and cause unnecessary friction for the average person. Most users are drawn to Apple devices because of their ease of use, and the ability to stay within a relatively secure environment operated solely by a single company. Accessing third-party app stores is unlikely to be high on people’s list of priorities. “People simply choose the most common thing, and there’s sort of a momentum and inertia,” says Horace Dediu, a smartphone analyst based in Europe. “This suggests that even with new regulations, users are unlikely to drastically change their habits.”

But Europe’s rules will change the way users encounter the iPhone and how they’re able to access services within it. Dediu argues that these regulations will likely make Apple’s carefully crafted, meticulously honed user experience worse, especially in Europe, pointing to the bombardment of General Data Protection Regulation banners every time a website loads for European users that has already complicated web browsing on the continent.

Beyond being able to choose your app store, having a plurality of payment options beyond Apple Pay, and potentially being shown more pop-ups, there are other indications that European rules could scupper a singular global iPhone experience. And the changes could be the most impactful for Apple’s future business, given the company is banking on its AI play to try and improve plateauing iPhone sales. Apple Intelligence has been seen as the company’s way of reinvigorating the iPhone and justifying the often-eye-watering price of the devices. Its central role in WWDC earlier this year showed how much stock the company is putting in AI.

For most global users, that AI experience could be game-changing in how they use their device. However, caution around European regulatory requirements could mean that the technology isn’t shipped on iPhones destined for Europe—at least not at first. Shortly after announcing Apple Intelligence at WWDC, the company said it would not be launching the features in the EU because the European regulatory requirements to provide interoperability with other services could damage user privacy and the security of its ecosystem. It’s unknown whether anything has changed since then.

“I am curious to know the extent to which Apple will be able to launch such experiences in the European Union in the context of the DMA and AI Act regulations,” says Thomas Husson, vice president and principal analyst at Forrester. “Consumers in this region will probably have to wait a few more months to get a fully integrated Apple Intelligence experience.”

Dediu also isn’t a fan of the EU’s consumer protection-focused approach. He describes it as a “lose-lose situation where the EU has decided to cripple itself.” Dediu believes the changes Apple may have to make for phones in Europe will have minimal long-term impact on the firm’s business model, but any suggestion of a second-class system for European users—even if in the pursuit of complying with EU regulation—is likely to go down badly with regulators.

At a late June conference, European Commission vice president Margarethe Vestager told attendees that Apple’s decision to withhold features from European consumers was a “stunning, open declaration that they know 100% that this is another way of disabling competition where they have a stronghold already.”

Yet consumers might not feel that way, reckons Dediu. AI has become the trendy new technology that people want on their devices. “I would say, universally, people are super annoyed by this,” he says. “I don’t get the sense that people feel liberated because they have to jump through so many hoops.”