Apple Inc. (NASDAQ:AAPL) reportedly faces mounting scrutiny from U.S. authorities over its efforts to incorporate artificial intelligence features in iPhones sold in China through a potential partnership with Alibaba Group Holding Ltd. (NYSE:BABA).

The deal, which would allow Alibaba’s AI technology to power iPhones in China, has drawn concern from both the White House and Congress due to national security risks and the potential amplification of Chinese tech capabilities, The New York Times reports, citing people familiar with the discussion.

Over recent months, U.S. officials have privately questioned Apple executives about the proposed tie-up.

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Lawmakers are worried that working with a major Chinese firm could lead to data-sharing obligations under Beijing’s laws and assist China’s advancement in military-use AI.

Meetings between Apple and members of the House Select Committee on China revealed gaps in Apple’s preparedness, with company representatives reportedly unable to provide specifics about regulatory commitments or data protections.

The friction comes amid a broader tech rivalry between the U.S. and China.

Policymakers, viewing AI as pivotal in future warfare, have taken steps to restrict China’s access to cutting-edge AI chips. Now, they’re weighing whether to add Alibaba and similar firms to a blacklist that would bar dealings with American companies, The New York Times adds.

Adding fuel to the fire, former President Donald Trump recently criticized Apple CEO Tim Cook for shifting manufacturing to India instead of focusing on domestic production.

The remarks came during Trump’s Middle East visit, highlighting broader dissatisfaction with Apple’s global strategy.

China remains Apple’s second-largest market, making the stakes particularly high.

Without a local AI partner like Alibaba, Apple could struggle to keep pace with domestic rivals such as Huawei and Xiaomi.

Apple reportedly explored multiple local partners before settling on Alibaba and has already sought regulatory clearance for the AI features. However, congressional leaders remain alarmed by the possibility of Apple binding itself to Chinese laws in this emerging technological domain.

Rep. Raja Krishnamoorthi (D-IL) expressed frustration over Apple’s lack of transparency, calling Alibaba “a poster child” for China’s military-civil fusion strategy.

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