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AI features delayed, rivals Google and Microsoft ( MSFT ) advance

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Regulatory challenges threaten Apple's ( AAPL ) App Store fees

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Smart glasses market sees Meta and Google leading

By Stephen Nellis

CUPERTINO, California, June 9 (Reuters) - Apple ( AAPL ) is

facing an unprecedented set of technical and regulatory

challenges as some of its key executives are set to take the

stage on Monday at the company's annual software developer

conference.

On the technical side, many of the long-awaited

artificial-intelligence features Apple ( AAPL ) promised at the same

conference a year ago have been delayed until next year, even as

its rivals such as Alphabet's Google and Microsoft ( MSFT )

woo developers with a bevvy of new AI features. Those

unfulfilled promises included key improvements to Siri, its

digital assistant.

On the regulatory front, courts in the U.S. and Europe are

poised to pull down the lucrative walls around Apple's ( AAPL ) App Store

as even some of the company's former supporters question whether

its fees are justified.

Those challenges are coming to a head at the same time U.S.

President Donald Trump has threatened 25% tariffs on Apple's ( AAPL )

best-selling iPhone. Apple's ( AAPL ) shares are down more than 40% since

the start of the year, a sharper decline than Google and also

lagging the AI-driven gains in Microsoft ( MSFT ) shares.

Apple ( AAPL ) has launched some of the AI features it promised last

year, including a set of writing tools and image-generation

tools, but it still relies on partners such as ChatGPT creator

OpenAI for some of those capabilities. Bloomberg has reported

that Apple ( AAPL ) may open up in-house AI models to developers this

year.

But analysts do not believe Apple ( AAPL ) yet has what technologists

call a "multi-modal" model - that is, one capable of

understanding imagery, audio and language at the same time -

that could power a pair of smart glasses, a category that has

become a runaway hit for Meta Platforms ( META ). Google said

last month it would jump back in to this category, with

partners.

Such glasses, which are far lighter and cheaper than Apple's ( AAPL )

Vision Pro headset, could become useful because they would

understand what the user is looking at and could help answer

questions about it.

While Apple ( AAPL ) has focused on its $3,500 Vision Pro headset,

Google and Meta have seized on the smart glasses as a cheaper

way to deploy their AI software prowess against Apple ( AAPL ) in its

stronghold of hardware. Meta Ray-Bans all sell for less than

$400.

Analysts say Apple ( AAPL ) needs to answer that challenge but that

it is not likely to do so this week.

"I'm not trying to replace my phone - this is a

complementary thing that gives me more world context, because

it's got a camera and it sees what I see, and I can talk to it

in natural language," said Ben Bajarin, CEO of technology

consultancy Creative Strategies. "Apple ( AAPL ) is not positioned to do

that."

To be sure, Apple's ( AAPL ) rivals are not decisively ahead in smart

glasses. Anshel Sag, principal analyst with Moor Insights &

Strategy, said Meta's Ray-Bans still lack some features and

Google has not yet landed its "Gemini" model in a mass-market

pair of glasses yet.

"Meta has the undisputed lead, but Google is catching up

fast and probably has the best-suited AI for the job," Sag said.

"Vision Pro is great, but it's a showroom product that

developers can use."

But Bob O'Donnell, CEO of TECHnalysis Research, said it

remains far from clear that smart glasses will gain wide

acceptance. O'Donnell also said it is not certain that Apple ( AAPL ) is

at any particular disadvantage if it partners with a company

such as Google, OpenAI or even a smaller firm like Perplexity

for core AI technology.

So far, O'Donnell said, there is not yet strong evidence

that consumers are basing major hardware-purchasing decisions on

AI features.

"There's an argument to be made that it's OK that (Apple ( AAPL )) is

behind because, except for the bleeding edge, most people don't

care," O'Donnell said.