Now that the big tech companies' press conference season has come to an end, advisers in the Apple ecosystem believe that it is time for CEO Tim Cook to open his checkbook and make a blockbuster AI acquisition because Apple's shortcomings are too obvious.
Columnist Mark Gurman reported that the good news is that Apple, with more than $130 billion in cash reserves, is not without a way out - it can move into the future through acquisitions. A proper acquisition can bring Apple the talent and technology it clearly lacks, as can be seen from the plight of its Siri voice assistant and the lackluster generative AI results. Right now, Apple really needs a transformative acquisition.
The list of potential acquisition targets is long and the prices are staggering. Gurman believes that Perpleixity AI is the most likely target, and Apple has also discussed it internally, but has not yet officially contacted it. Other potential acquisitions could include French artificial intelligence company Mistral; Sierra AI, which focuses on customer service; or even Super Safe Intelligence or Thinking Machine Labs, founded by former OpenAI employees.
Acquiring any of these would be Apple’s largest acquisition ever, far exceeding the $3 billion it spent on Dr. Dre’s Beats headphones company in 2014. That deal was primarily to quickly build Apple Music to compete with Spotify. (It’s worth noting that Apple did not acquire Spotify as some expected.)
Apple has never been keen on large-scale acquisitions, and only makes such moves when it believes it urgently needs a product or expertise. And now is seen as such a moment. Apple’s competitors in the field of AI, especially Meta, are recruiting top AI talent in Silicon Valley at high prices, and Apple’s window of time to recruit talent for its AI team is closing.
Against this backdrop, some people think that a major deal is a natural outcome. Alex Kantrowicz, a writer for the Technology Newsletter, wrote that Apple’s acquisition of Perplexity AI “is such an obvious good deal for both parties that it seems nonsense to say anything more.” The deal would bring Apple not only talent but also a great product: Perplexity is a souped-up version of the search engine that many people have turned to as an alternative to Google. It can generate its own Wikipedia page for almost any niche topic or event you choose. Its content, while not entirely trustworthy, is a great starting point for in-depth research.
But the question is, does Apple really need to buy it? If Google is eventually ordered to stop paying Apple huge sums of money in exchange for its default search engine position on iOS, then owning Perplexity will give Apple a ready-made search product to fill the gap. That's good, of course, but not good enough to be worth $14 billion (expected offers are much higher than that). More importantly, Perplexity itself is built on AI models provided by other companies, such as OpenAI and Gemini. Apple is fully capable of developing similar products on its own if it really wants to. Even if it doesn't want to do it itself, it can rest assured that the best device to run Perplexity is still the iPhone.
What Apple really lacks is a sound set of basic AI models that can run locally on the device, rather than the kind that require transferring large amounts of data to the expensive cloud. Aside from getting more people involved in R&D, the acquisition of Perplexity doesn’t get Apple any closer to that goal.
Another real question is: Can the deal be done? Recently, the trend of big tech companies’ investments in AI has shifted from “full acquisition” to “strategic stakes” (you know), which can avoid regulatory scrutiny but at the cost of losing control. It’s hard to imagine Cook willingly putting himself in the position that Microsoft CEO Satya Nadella was in November 2023, when Sam Altman’s sudden departure from OpenAI caught him off guard. Nadella then gave intensive interviews to major business media, vowing that everything was fine, which was one of the most embarrassing scenes for a tech CEO. Recently, there have been signs that Microsoft’s partnership with OpenAI is at risk of breaking down. For a company like Apple, which is known for its “extreme control” and has a market value of $3 trillion, this uncertainty is absolutely unacceptable.
More importantly, although it sounds like the rhetoric of Nokia executives in 2007, Apple’s AI problem is far less urgent than Wall Street and commentary have made it out to be. Hardware devices and supporting services, which are the pillars of profitability, will remain solid in the next few years. Apple has enough time to polish AI application scenarios that are truly deeply integrated with its hardware, whether it is self-developed or in cooperation with external partners. Most importantly, Apple can also calmly explore new forms of products that adapt to the AI era, which is what it does best.
The old way is still the safest choice at present: carefully recruit talents to build a team. Attracting individuals with generous salaries rather than buying the entire team in a package is the best use of funds. Can spending a huge amount of money to acquire an entire AI company accelerate the development of a better Siri and other integrated AI tools? Maybe. But it is far from the natural course of some people. On the contrary, it is likely to cause fierce cultural conflicts within the company, lead to months of operational chaos, and trigger regulatory intervention.
There are many reasons for companies to make big acquisitions, but "panic" should never be one of them. Even in the face of heavy pressure from analysts, media and shareholders, we know that Apple will still prefer to move forward independently if it can.