CUPERTINO – For two years, Apple told iPhone buyers that a smarter Siri was on the way, included with the device and covered by the hardware they already paid for. On Thursday, Tim Cook changed that promise. On his final earnings call as chief executive, Cook disclosed that Apple plans to charge users extra for enhanced Siri AI through tiered iCloud+ subscriptions, creating a paywall for capabilities the company has positioned as standard since announcing Apple Intelligence at WWDC 2024.
“We do believe there will be people that want to use [Siri AI] a lot,” Cook said, “and so we will have some kind of upgrade possibilities on iCloud+, where people can buy up the stack on iCloud+, and we’ll see how the pickup for that is.” The remark came without specifics: no pricing, no feature breakdown, no clarity on what remains available to base iCloud+ subscribers versus those who pay for higher tiers.
The timing carries weight. Apple settled a $250 million class-action lawsuit earlier this year over the marketing of iPhone 16’s AI capabilities. The settlement covered customers who argued they bought a phone on the strength of AI features Apple promoted before those features were ready. That litigation is now closed. The settlement closed without Apple admitting wrongdoing. What it did acknowledge is that the gap between what it marketed and what it shipped was large enough to require nine figures to resolve. On the same week that litigation closed, Apple’s chief executive described the new business model that governs what customers will get from Siri going forward.
iOS 27, available now in public beta, includes Apple’s rebuilt Siri AI. Apple says the broader release is planned for fall 2026. But the Thursday announcement makes clear that what ships this autumn will come in tiers, with a ceiling on Siri’s capability that rises with the monthly bill. The beta already includes some Siri improvements users have described as meaningful. It also lacks several advanced functions Apple demonstrated earlier this year, the kind of capabilities most likely to sit behind the paywall Cook described.
TechCrunch reported that Apple’s tiered approach is modeled on structures already common in the industry. Anthropic and OpenAI both offer free access with paid upgrades for heavier use. What differs in Apple’s case is the expectation the company set when it sold the hardware. iPhone users did not sign up for a subscription AI service. They bought a phone whose manufacturer told them, repeatedly and in marketing materials that later prompted a lawsuit, that AI was part of what they were buying. Charging now for the better version of that AI, built through billion-dollar deal to license Google’s Gemini, is a different proposition from what Anthropic or OpenAI charge for. Those companies have always sold their AI as a subscription product, and their users signed up knowing it.
Apple reported fiscal third-quarter revenue of $111.2 billion on Thursday, with diluted earnings per share of $2.01 and Services at an all-time quarterly record of $30.98 billion. Cook’s final earnings call beat analyst estimates on every line, and the stock still dropped in after-hours trading, as analysts focused on guidance that suggested a softer quarter ahead and unanswered questions about how the new subscription structure will perform.
Apple is navigating a supply environment that has complicated the AI device business across the industry. Industry-wide RAM shortages driven by AI demand have pushed prices higher at Meta, Samsung, Microsoft, and Sony. Apple has not raised iPhone prices, but the paywall approach is an alternative path to the same destination: capturing AI-driven revenue through subscriptions rather than hardware premiums. Whether that conversion rate materializes depends on features Apple has not yet detailed and pricing Apple has not yet published.
The Gemini licensing arrangement is itself a signal. Apple Intelligence, launched at WWDC 2024, was meant to differentiate Apple hardware through on-device AI, the kind of processing that keeps data on the device and away from external servers. Two years later, the most capable version of Siri runs on Google’s cloud infrastructure. For a company that has built its data privacy pitch over a decade, licensing a cloud model from the world’s largest advertising firm is not a refinement. It is an admission that Apple could not build a capable enough assistant on its own silicon.
John Ternus, Apple’s SVP of Hardware Engineering, assumes the CEO role on September 1. Cook’s departure leaves Ternus with a Siri that is finally competitive, in beta, on a competitor’s model, behind a paywall that has no published price and no confirmed feature list. The fall iOS 27 launch will be his first significant product moment in the role.
The unanswered question Cook left on the table is exactly the one that will define what the Siri paywall looks like in practice: which features go behind it, and whether the users Apple has spent two years promising an AI future will find the answer worth paying for. Cook made clear on Thursday that Apple is watching. What it is watching for is whether customers will pay for something they were told would simply be there.
