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Apple, Private Cloud Compute, and trusted AI
The growing desire for sovereign cloud is transitioning to become a need for sovereign AI. Companies and individuals want the benefits of artificial intelligence, but don’t want to risk their data by sharing it with third-party firms without clear security and privacy mandates. Many users want or need to keep their data protected by national boundaries.
All of these desires are an Apple opportunity.
Apple in the middleHere’s how that opportunity could work – indeed, to some extent, it’s already happening: Private Cloud Compute (PCC) is Apple’s private system to deliver Apple Intelligence services from the cloud. The idea is that those tasks its devices can’t yet handle at the edge can be handed off to Apple’s servers for processing.
PCC is built to operate in great privacy. To ensure it keeps that promise, Apple has opened its system up to unprecedented scrutiny. Requests made of the service are cryptographically secured so Apple doesn’t know the question, doesn’t know the answer, and doesn’t know who made the query in the first place. It also doesn’t keep the question.
This is far ahead of many cloud-based AI firms.
Data controllersWhat this means is that AI services provided by Apple or via PCC are as secure as they can be — and while that doesn’t entirely resolve the need for territorial protection of data, it does go an awful long way to ensuring corporate information is well protected.
In time, as those PCC servers roll off Apple’s US production line and get racked up in its server farms worldwide, Apple will be able to provide access to these services on a more localized basis. Apple Intelligence Europe, or Japan, for example.
The solutions aren’t precisely data controllers, as they don’t collect any data.
What the system doesn’t yet do is act as an intermediary. Think of it like this: You want to make an AI request of a third-party GenAI service (it doesn’t matter which one). You file your request, which is sent to the PCC system, anonymized, and then despatched to a third-party system for additional processing. That arrangement would still leave some things exposed, such as any documents or images you might use, but would leave your identity and the nature of your request obfuscated. While this isn’t quite sovereign AI, it comes nearer to becoming that.
Dump pipes with smart machineryOf course, AI firms are going to resist becoming service providers to Apple. They will recognize that the very data Apple’s systems protect is the data they want to devour to inform their own large language models (LLMs). Perhaps this is why Cupertino’s speculated arrangement with Google calls for the latter’s Gemini AI to run natively on Apple’s own servers. This may deliver the kind of privacy protection people are beginning to demand.
Once again, as PCC servers are installed internationally, it might become possible for Apple to offer up access to those services on a regional basis, enabling enterprise users to securely use its own AI suites to handle geographically-constrained or sensitive data.
When data does have to be shared externally, Apple’s existing system gives users a chance to approve – or disallow – that task. It injects trust and control into that relationship. If the PCC system were to become an intermediary to third-party AI services, people would be more likely to choose to access those services through Apple’s systems rather than anything else.
Open marketsWill AI service providers like this? Probably not. They might argue that giving customers the option to enjoy trusted access to their services is anti-competitive. But Apple could argue that depriving customers of access to their services within this trust boundary is also inherently anticompetitive.
It is, after all, quite clear that access to trusted AI is something people need, and opening markets is meant to ensure competitors are able to deliver things consumers want. That means third-party AI services must open up, so others can access their services in innovative ways, such as via PCC. Markets are either open, or they aren’t. It’s inevitable that pure AI companies will become service providers, rather than anything else.
Apple, as a combined hardware/software/services company, is therefore in a good position to become the most trusted intermediary through which to access all these services, thanks to PCC. Doing so should support what seems to be its AI game plan, which is to provide its own suite of highly useful AI tools, while enabling its customers to access other services they might need without sacrificing the privacy and security so important to the Apple experience.
As the cards fall into placeTo reiterate, the company’s growing presence in enterprise IT means Apple has an opportunity to become the go-to platform for trusted AI, potentially evolving to become a provider of trusted, sovereign AI. That’s all thanks to smart use of Private Cloud Compute as an adjunct to its proliferating hardware ecosystem.
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IBM to cut thousands of jobs as Red Hat growth slows
IBM will cut a “low single-digit percentage” of its 270,000-strong workforce in the fourth quarter, the company said Tuesday. The reduction could affect between 2,700 and 5,400 employees if there is an employee reduction of just 1% or 2%.
“We routinely review our workforce through this lens and at times rebalance accordingly. In the fourth quarter we are executing an action that will impact a low single-digit percentage of our global workforce,” an IBM spokesperson said.
IBM said that US employment will remain “flat year over year,” suggesting the company will backfill domestic roles in other geographies. The company currently lists 2,466 job openings in India compared to 370 in the US, according to its Careers portal.
This marks IBM’s third major workforce reduction since September 2024, when the company eliminated an estimated 8,000 to 10,000 positions. Another 5,000 to 7,000 positions were cut in March 2025.
Slowing growth in a key software businessThe timing of the cuts is notable. Three weeks before announcing the layoffs, IBM reported slowing growth in Red Hat, its highest-margin hybrid cloud business, and the centerpiece of CEO Arvind Krishna’s transformation strategy.
IBM’s third-quarter earnings report on October 22 showed software revenue growth of 10% to $7.2 billion. Within that segment, the Red Hat hybrid cloud unit grew 14%, down from 16% in the prior quarter. Analysts had expected 16% growth.
Sanchit Vir Gogia, chief analyst and CEO at Greyhound Research, said the deceleration reflects internal execution challenges. “This shift exposes delivery strain inside a business unit expected to move faster than it currently does,” Gogia said. “While enterprise clients continue to view IBM as a dependable partner in complex environments, the way hybrid cloud is bought and measured has changed. Organisations are no longer buying platforms in isolation. They are buying the ability to act quickly.”
Red Hat is central to CEO Arvind Krishna’s strategy to shift IBM toward higher-margin software and cloud services. During the earnings call, Krishna said he expects Red Hat to return to “mid-teen percentage growth, or close to that level, entering 2026.”
Streamlining for efficiencyGogia said the workforce reduction is designed to streamline operations rather than signal financial distress. “Over the past year, IBM has redesigned more than seventy internal workflows through automation and AI, creating the space to reduce headcount without cutting capacity where it matters most,” he said. “From what we have observed, engineering and delivery teams remain protected.”
The cuts aim to reduce internal complexity, Gogia said. “These decisions are designed to reduce internal complexity and channel effort into the parts of the business with the clearest return. This is not about shrinking the company. It is about shaping it to scale more effectively.”
However, execution issues remain a concern. “In many client settings, the technology is not the issue. It is how IBM’s internal teams pass work between groups that slows things down,” Gogia said. “This becomes especially visible in deployments that cross product lines, such as OpenShift tied to AI models or hybrid data orchestration.”
Increased client oversight recommendedThe combination of workforce cuts and internal execution challenges is prompting analysts to advise closer monitoring of IBM engagements.
Greyhound Research is advising clients to increase oversight of IBM delivery operations during the reorganization.
“We are advising CIOs to step in early and request formal documentation around coverage, support depth, and continuity of leadership across their accounts,” Gogia said. “In recent months, we have seen examples where IBM’s internal transitions slowed deployment, not because of missing capability, but due to unclear ownership between business units.”
The issue typically affects projects that cross organizational boundaries, such as deployments that combine Red Hat with consulting services or blend software delivery with infrastructure planning.
IBM’s internal structure is still adjusting, Gogia said. “During this time, it is essential for clients to clarify who is accountable for each phase of delivery and to lock those roles in place across the full term of execution. This is not a sign of instability. It is a normal stage in any large-scale realignment. But it does require CIOs to shift from passive trust to active engagement.”
CIOs should validate support agreements and establish clear accountability for each phase of delivery. Organizations should also clarify how the workforce changes affect product roadmap timelines, particularly for implementations of IBM’s watsonx AI platform, Gogia added. “The coming months will need to show that the reshaped teams can respond faster, maintain roadmap delivery, and carry client work forward without hesitation,” Gogia said. “If that happens, the decision will be seen not as a cost cut, but as an investment in operational clarity.”
Amazon’s legal threat to Perplexity raises questions over AI autonomy and platform control
AI startup Perplexity has accused Amazon of using legal threats to block innovation after the e-commerce giant demanded that its Comet browser stop allowing AI agents to shop on Amazon on behalf of users.
In a blog post titled “Bullying is Not Innovation,” Perplexity described the move as an attack on user choice and a warning sign for the future of agentic AI.
The dispute highlights growing tensions between dominant online platforms and emerging AI tools that aim to act autonomously for users, raising new questions about competition, compliance, and control in digital commerce.
Perplexity said Amazon’s demand threatens the idea of “user agents,” which it defines as AI assistants that act with the same permissions as the user and perform tasks only on their behalf.
It also accused Amazon of putting ad revenue ahead of user convenience, citing CEO Andy Jassy’s recent comments to investors about advertising returns.
Amazon has disputed that characterization, saying its actions are intended to protect customers and ensure service quality. In a statement, the company said that third-party applications that make purchases on behalf of users must operate transparently and respect businesses’ choices about participation.
“Agentic third-party applications such as Perplexity’s Comet have the same obligations, and we’ve repeatedly requested that Perplexity remove Amazon from the Comet experience, particularly in light of the significantly degraded shopping and customer service experience it provides,” Amazon added.
Platform control vs. AI autonomyAnalysts say the dispute highlights the practical and commercial challenges that arise as AI agents begin to operate directly on behalf of users.
“The legal threat shows that the future of agentic AI is not as seamless as the industry perceived,” said Lian Jye Su, chief analyst at Omdia. “Despite open standards like MCP and A2A, most brands and applications value direct, unique user traffic to their platforms and interfaces as the main revenue drivers. As such, they do not appreciate seamless integration with other AI agents that now sit between unique users and these applications, thereby reducing unique user traffic and potentially traffic-based revenue from advertising and usage.”
Leslie Joseph, principal analyst at Forrester, said Amazon’s action can be read as “an opening salvo in a broader fight for control of the interface.” Agentic browsers like Perplexity’s Comet act as brokers between users and storefronts, stripping away the ads, recommendations, and pricing tactics that underpin Amazon’s margin model.
“This shifts the locus of influence from platform to consumer,” Joseph added. “The episode is a pointer to what’s coming: dominant platforms are on the back foot defending their ‘closed’ ecosystems, while agentic browsers are trying to reopen the web around user-directed automation.”
Amazon’s own initiatives in AI-powered shopping add another layer to the conflict. The company is developing services such as “Buy For Me” and the “Rufus” assistant, which can recommend and purchase products within its ecosystem. Amazon’s move to restrict third-party AI agents may also serve to safeguard these internal projects and their associated revenue streams.
Navigating agentic AI risksThe outcome of the Amazon–Perplexity dispute could help shape future rules governing how AI agents and online platforms interact. Analysts say it may eventually lead to clearer frameworks covering access controls, user authentication, data exchange, and revenue-sharing between agents and applications.
“However, this will have further challenges because not all applications monetize in the same way, and the revenue models vary significantly across verticals,” Su added. “So there may not be a one-size-fits-all solution even with legal resolutions.”
For enterprises, the case serves as a reminder to deploy agentic AI tools with greater caution.
“It’s not a stretch to imagine that agents that rely on scraping, browser automation, or gray-zone access will face barriers as platforms tighten control over APIs and data channels,” Joseph said. This means that enterprises must take extra care when their AI agents interact with competitors’ or vendors’ IP, user data, and revenue systems. “In many cases, such instances happen unknowingly, so this requires enterprises to fully understand their AI agent behaviors and put in the right framework to minimize conflicts with competitors and other vendors,” Su added.
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