Apple defended its new system to scan iCloud for illegal child sexual abuse materials (CSAM) on Monday during an ongoing controversy over whether the system reduces Apple user privacy and could be used by governments to surveil citizens.
Last week, Apple announced it has started testing a system that uses sophisticated cryptography to identify when users upload collections of known child pornography to its cloud storage service. It says it can do this without learning about the contents of a user’s photos stored on its servers.
Apple reiterated on Monday that its system is more private than those used by companies like Google and Microsoft because its system uses both its servers and software running on iPhones.
Privacy advocates and technology commentators are worried Apple’s new system, which includes software that will be installed on people’s iPhones through an iOS update, could be expanded in some countries through new laws to check for other types of images, like photos with political content, instead of just child pornography.
Apple said in a document posted to its website on Sunday governments cannot force it to add non-CSAM images to a hash list, or the file of numbers that correspond to known child abuse images Apple will distribute to iPhones to enable the system.
“Apple will refuse any such demands. Apple’s CSAM detection capability is built solely to detect known CSAM images stored in iCloud Photos that have been identified by experts at NCMEC and other child safety groups,” Apple said in the document. “We have faced demands to build and deploy government-mandated changes that degrade the privacy of users before, and have steadfastly refused those demands. We will continue to refuse them in the future.”
It continued: “Let us be clear, this technology is limited to detecting CSAM stored in iCloud and we will not accede to any government’s request to expand it.”
Some cryptographers are worried about what could happen if a country like China were to pass a law saying the system has to also include politically sensitive images. Apple CEO Tim Cook has previously said that the company follows laws in every country where it conducts business.
Companies in the U.S. are required to report CSAM to the National Center for Missing & Exploited Children and face fines up to $300,000 when they discover illegal images and don’t report them.
A reputation for privacy
Apple’s reputation for defending privacy has been cultivated for years through its actions and marketing. In 2016, Apple faced off against the FBI in court to protect the integrity of its on-device encryption systems in the investigation of a mass shooter.
But Apple has also faced significant pressure from law enforcement officials about the possibility of criminals “going dark,” or using privacy tools and encryption to prevent messages or other information from being within the reach of law enforcement.
The controversy over Apple’s new system, and whether it’s surveilling users, threatens Apple’s public reputation for building secure and private devices, which the company has used to break into new markets in personal finance and healthcare.
Critics are concerned the system will partially operate on an iPhone, instead of only scanning photos that have been uploaded to the company’s servers. Apple’s competitors typically only scan photos stored on their servers.
“It’s truly disappointing that Apple got so hung up on its particular vision of privacy that it ended up betraying the fulcrum of user control: being able to trust that your device is truly yours,” technology commentator Ben Thompson wrote in a newsletter on Monday.
Apple continues to defend its systems as a genuine improvement that protects children and will reduce the amount of CSAM being created while still protecting iPhone user privacy.
Apple said its system is significantly stronger and more private than previous systems by every privacy metric the company tracks and that it went out of its way to build a better system to detect these illegal images.
Unlike current systems, which run in the cloud and can’t be inspected by security researchers, Apple’s system can be inspected through its distribution in iOS, an Apple representative said. By moving some processing onto the user’s device, the company can derive stronger privacy properties, such as the ability to find CSAM matches without running software on Apple servers that check every single photo.
Apple said on Monday its system doesn’t scan private photo libraries that haven’t been uploaded to iCloud.
Apple also confirmed it will process photos that have already been uploaded to iCloud. The changes will roll out through an iPhone update later this year, after which users will be alerted that Apple is beginning to check photos stores on iCloud against a list of fingerprints that correspond to known CSAM, Apple said.
The S & P 500 ran into a brick wall Friday and finished the week lower, just one day after closing at a record high. The rotation out of tech stocks, which supported the Dow , was on full display. The across-the-board rally on Wednesday after the Federal Reserve cut interest rates for the third time this year was long forgotten. .SPX .IXIC,.DJI 5D mountain S & P 500, Nasdaq and Dow last week For the week, the broad-market S & P 500 lost roughly 0.6%, while the tech-heavy Nasdaq fell 1.6%, breaking a two-week win streak. The sector shuffle that made materials, financials, and industrials weekly winners — and communications services and information technology weekly losers — pushed the Dow 1% higher last week, its third consecutive weekly gain. Despite December historically being a strong month, the S & P 500 and Nasdaq are down 0.3% and 0.7%, respectively. The Dow is up nearly 1.6%. Perhaps the big man will bail out Wall Street. The so-called Santa Claus rally , a seasonal pattern that occurs in the final five trading days of the year and the first two of the new year, would begin on Dec. 19. Until then, here are four significant moments that drove the market last week. 1. Broad(com) worries Friday’s market was slammed by tech selling, led by Broadcom ‘s 11.5% plunge. The chipmaker’s quarterly beat and raise on Thursday were overshadowed by misinterpreted remarks from management during the earnings call. The Broadcom hit stoked AI-stock valuation worries that have been simmering. During the sell-off on Friday morning, Jim Cramer said the custom chipmaker’s business was “on fire,” and that the decline could be a buying opportunity. Broadcom was our worst performer of the week, followed by Meta Platforms and Nvidia . 2. Tarnished Oracle The second session sell-off of Oracle on Friday didn’t help. The stock was crushed nearly 11% on Thursday following a quarterly sales miss, a disappointing guidance update, and an increased spending outlook. The magnitude of the stock decline was compounded by what management did not address on Wednesday evening’s conference call: OpenAI’s ability to fulfill its massive commitments to purchase AI computing power from Oracle. On Friday, shares sank another 4.5% after Bloomberg reported that Oracle was pushing back the completion dates for some data centers it is completing for OpenAI. Oracle pushed back , asserting “all milestones remain on track.” 3. Nvidia gets China OK While Nvidia caught shrapnel from AI trade worries, the all-purpose artificial intelligence chip king received long-awaited good news last week. After Monday’s close, President Donald Trump said on social media that Nvidia will be allowed to ship its second-best H200 chips to “approved customers in China,” and the U.S. government would take a 25% cut. Nvidia reached a deal in August with the U.S. government to provide 15% of made-for-China, throttled-down H20 sales in exchange for export licenses. It turns out China did not want the H20s. The question of whether China will want H200s was debated all week. 4. Powerful guidance On the industrial side of the AI trade, GE Vernova was our top performer despite Friday’s 4.6% decline. The energy equipment company, whose products and services help power AI data centers, closed at a record high Wednesday on incredibly positive guidance all the way out to fiscal 2028. CEO Scott Strazik, on CNBC, amplified the compelling near- and long-term growth story that management outlined at Tuesday evening’s investor meeting. On Wednesday, we raised our GE Vernova price target to $800 per share from $700, and reiterated our buy-equivalent 1 rating. The Honeywell spinoff, Solstice Advanced Materials , and Dover were also weekly winners. (Jim Cramer’s Charitable Trust is long AVOG, META, NVDA, GEV, SOLS, DOV. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Oracle CEO Clay Magouyrk appears on a media tour of the Stargate AI data center in Abilene, Texas, on Sept. 23, 2025.
Kyle Grillot | Bloomberg | Getty Images
Oracle on Friday pushed back against a report that said the company will complete data centers for OpenAI, one of its major customers, in 2028, rather than 2027.
The delay is due to a shortage of labor and materials, according to the Friday report from Bloomberg, which cited unnamed people. Oracle shares fell to a session low of $185.98, down 6.5% from Thursday’s close.
“Site selection and delivery timelines were established in close coordination with OpenAI following execution of the agreement and were jointly agreed,” an Oracle spokesperson said in an email to CNBC. “There have been no delays to any sites required to meet our contractual commitments, and all milestones remain on track.”
The Oracle spokesperson did not specify a timeline for turning on cloud computing infrastructure for OpenAI. In September, OpenAI said it had a partnership with Oracle worth more than $300 billion over the next five years.
“We have a good relationship with OpenAI,” Clay Magouyrk, one of Oracle’s two newly appointed CEOs, said at an October analyst meeting.
Doing business with OpenAI is relatively new to 48-year-old Oracle. Historically, Oracle grew through sales of its database software and business applications. Its cloud infrastructure business now contributes over one-fourth of revenue, although Oracle remains a smaller hyperscaler than Amazon, Microsoft and Google.
OpenAI has also made commitments to other companies as it looks to meet expected capacity needs.
In September, Nvidia said it had signed a letter of intent with OpenAI to deploy at least 10 gigawatts of Nvidia equipment for the San Francisco artificial intelligence startup. The first phase of that project is expected in the second half of 2026.
Nvidia and OpenAI said in a September statement that they “look forward to finalizing the details of this new phase of strategic partnership in the coming weeks.”
But no announcement has come yet.
In a November filing, Nvidia said “there is no assurance that we will enter into definitive agreements with respect to the OpenAI opportunity.”
OpenAI has historically relied on Nvidia graphics processing units to operate ChatGPT and other products, and now it’s also looking at designing custom chips in a collaboration with Broadcom.
On Thursday, Broadcom CEO Hock Tan laid out a timeline for the OpenAI work, which was announced in October. Broadcom and OpenAI said they had signed a term sheet.
“It’s more like 2027, 2028, 2029, 10 gigawatts, that was the OpenAI discussion,” Tan said on Broadcom’s earnings call. “And that’s, I call it, an agreement, an alignment of where we’re headed with respect to a very respected and valued customer, OpenAI. But we do not expect much in 2026.”
“This is the wrong approach — and most likely illegal,” Sen. Amy Klobuchar, D-Minn., said in a post on X Thursday.
“We need a strong federal safety standard, but we should not remove the few protections Americans currently have from the downsides of AI,” Klobuchar said.
Trump’s executive order directs Attorney General Pam Bondi to create a task force to challenge state laws regulating AI.
The Commerce Department was also directed to identify “onerous” state regulations aimed at AI.
The order is a win for tech companies such as OpenAI and Google and the venture firm Andreessen Horowitz, which have all lobbied against state regulations they view as burdensome.
It follows a push by some Republicans in Congress to impose a moratorium on state AI laws. A recent plan to tack on that moratorium to the National Defense Authorization Act was scuttled.
Collin McCune, head of government affairs at Andreessen Horowitz, celebrated Trump’s order, calling it “an important first step” to boost American competition and innovation. But McCune urged Congress to codify a national AI framework.
“States have an important role in addressing harms and protecting people, but they can’t provide the long-term clarity or national direction that only Congress can deliver,” McCune said in a statement.
Sriram Krishnan, a White House AI advisor and former general partner at Andreessen Horowitz, during an interview Friday on CNBC’s “Squawk Box,” said that Trump is was looking to partner with Congress to pass such legislation.
“The White House is now taking a firm stance where we want to push back on ‘doomer’ laws that exist in a bunch of states around the country,” Krishnan said.
He also said that the goal of the executive order is to give the White House tools to go after state laws that it believes make America less competitive, such as recently passed legislation in Democratic-led states like California and Colorado.
The White House will not use the executive order to target state laws that protect the safety of children, Krishnan said.
Robert Weissman, co-president of the consumer advocacy group Public Citizen, called Trump’s order “mostly bluster” and said the president “cannot unilaterally preempt state law.”
“We expect the EO to be challenged in court and defeated,” Weissman said in a statement. “In the meantime, states should continue their efforts to protect their residents from the mounting dangers of unregulated AI.”
Weissman said about the order, “This reward to Big Tech is a disgraceful invitation to reckless behavior by the world’s largest corporations and a complete override of the federalist principles that Trump and MAGA claim to venerate.”
In the short term, the order could affect a handful of states that have already passed legislation targeting AI. The order says that states whose laws are considered onerous could lose federal funding.
One Colorado law, set to take effect in June, will require AI developers to protect consumers from reasonably foreseeable risks of algorithmic discrimination.
Some say Trump’s order will have no real impact on that law or other state regulations.
“I’m pretty much ignoring it, because an executive order cannot tell a state what to do,” said Colorado state Rep. Brianna Titone, a Democrat who co-sponsored the anti-discrimination law.
In California, Gov. Gavin Newsom recently signed a law that, starting in January, will require major AI companies to publicly disclose their safety protocols.
That law’s author, state Sen. Scott Wiener, said that Trump’s stated goal of having the United States dominate the AI sector is undercut by his recent moves.
“Of course, he just authorized chip sales to China & Saudi Arabia: the exact opposite of ensuring U.S. dominance,” Wiener wrote in an X post on Thursday night. The Bay Area Democrat is seeking to succeed Speaker-emerita Nancy Pelosi in the U.S. House of Representatives.
Trump on Monday said he will Nvidia to sell its advanced H200 chips to “approved customers” in China, provided that U.S. gets a 25% cut of revenues.