For Apple Inc. (AAPL), smart assistant Siri could turn out to be a double-edged sword for its bottom line. The market and use cases for smart assistants and artificial intelligence in daily life are exploding, but Apple, which pioneered the industry with Siri back in 2012, is caught in a bind. Beset by internal delays, the company has fallen behind rivals Amazon.com, Inc. (AMZN) and Alphabet Inc. (GOOG) subsidiary Google. Apple could also face further complications down the road thanks to its insistence on user privacy.

A recent Wall Street Journal report provides a bunch of reasons why Apple lost ground to rivals in artificial intelligence. These range from departures of key executives to a revision of the company's original vision for Siri. The end result of these developments is that Apple launched its smart speaker a good two years after its rivals. (See also: Amazon's Alexa Will Approach 71% of Smart Speaker Market: eMarketer.)

Catchphrases for Amazon's Alexa and Google Home have overtaken Siri in popularity. Public recall makes a big difference when you are positioning your device to become a default choice for smart assistants. In turn, Siri's fading away from public consciousness could have a significant effect on Apple's hardware sales and, consequently, its bottom line.

The lure of smart assistants to tech behemoths lies in customer data. The data can be used in two ways. The companies can apply it to craft customized products and services for users. For example, Amazon can use the data to boost its e-commerce business by proving personalized and timely shopping recommendations. Technology companies can also sell the data to advertisers. An instance of this occurred recently, when Google Home played an ad for a movie release. Both routes to monetization may be difficult for Apple, given its insistence on user privacy. (See also: Google's Home Assistant Is Now Playing Ads.)

Increasingly, Apple has chosen to market itself as a company that does not compromise customer data. This rules out generating revenue through advertising channels on services that use Siri. Even in China, the company's second largest market, the government could force Apple's hand on user data and limit its options for monetizing the data generated by its smart assistant. (See also: 9 Apple Products That Changed the World.)

This means that Apple will have to depend on sales of hardware devices that integrate Siri, such as the iPhone and HomePod. But the company's efforts to improve these products may be stymied due to lack of user data. According to the WSJ article, Apple randomly tags Siri search searches and keeps them in its database for only six months. Eddy Cue, vice president of internet software at Apple, is quoted as saying that the company "often uses" generic data rather than user data to train Siri. The results of this strategy are shown in Siri's performance, which lags that of rival AI systems. (See also: Is the Price for Apple's HomePod Justified?)

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