Report: Apple Inc. (AAPL.US) Cuts Internal AI Budget as Big Tech's AI Spending Enters an "Era of Reckoning"

Report: Apple Inc. (AAPL.US) is cutting its budget for employee use of artificial intelligence (AI) as part of cost-reduction measures, even as the company continues to seek to place AI at the core of its operations. According to people familiar with the matter, last month Apple Inc. quietly lowered the daily spending cap for some engineers using AI models from $300 to $200. These people said Apple Inc. is now planning further cuts to the budgets of some engineering teams, with daily limits potentially as low as $100. The adjustments highlight the dilemma facing Apple Inc.: controlling costs while encouraging employees to integrate AI more deeply into their daily work. The company is pushing to use AI to transform engineering processes and other internal operations, but at the same time tightening spending limits on employee use of the technology. People familiar with the matter said many teams outside the engineering department already face a daily spending cap of $100, but Apple Inc. has considered lowering the cap for some teams to as little as $25. Employees who need higher limits to perform their duties can apply to senior leadership for an exemption. An Apple Inc. spokesperson declined to comment. These budgets cover tokens, the units of text and other data that AI models process when handling requests. AI service providers typically charge by the number of tokens consumed, with more advanced models generally charging more. Complex tasks such as writing and debugging software code can consume large numbers of tokens. Tech industry shifts from "encouraging experimentation" to "scrutinizing costs" These limits reflect a broader shift across the tech industry: companies that initially encouraged broad experimentation with AI are increasingly scrutinizing the related costs. The challenge is determining how much spending can be cut without eroding the efficiency gains that originally drove companies to adopt the technology. Reactions to the adjustments within the company have been mixed. Some employees said few staff members used up the $300 daily limit, so the previous cap was too loose. Others see the cuts as a signal of broader cost reduction, which has heightened concerns about potential layoffs. Some Apple Inc. departments have hired outside consultants to assess their efficiency and operations, adding to employee anxiety about possible future restructuring. Incoming Chief Executive John Ternus is reportedly pushing the company to operate at a faster pace and in a leaner manner, reducing management layers. The actual savings from these cuts remain unclear, especially given that some employees were not previously close to their spending limits. If Apple Inc. further restricts spending, the impact could be more pronounced, potentially forcing heavier users to apply for exemptions in order to continue using AI tools. Meanwhile, Apple Inc.'s overall spending is rising. The company said this week that research and development expenses for fiscal 2026 rose 32%, driven by higher infrastructure and AI costs. Company-wide operating expenses jumped 22% to $75.5 billion, accounting for 16% of total net sales. Apple Inc. employees can use a range of AI services, including Anthropic PBC's Claude, OpenAI's ChatGPT and Alphabet Inc. Class C (GOOGL.US)'s Gemini. Some teams are being asked to use lower-cost models or rely on AI models running locally on devices. Apple Inc. is not the only company seeking to control AI spending. Microsoft Corporation (MSFT.US) has also tightened internal AI spending limits, while Tesla, Inc. (TSLA.US) has set a weekly $200 cap on employee AI spending. Uber Technologies, Inc. (UBER.US) has set a monthly limit of $1,500 for use of a single AI coding tool. Meta (META.US) has introduced a token budget system and encourages employees to shift to internally developed AI tools.