Apple Eyes Perplexity AI Acquisition Amidst Shifting AI Landscape and Google Antitrust Concerns
A significant strategic shift may be underway at Apple Inc., as the tech giant is reportedly holding internal discussions about a potential acquisition of artificial intelligence startup Perplexity AI. According to a report by Mark Gurman of Bloomberg, this development indicates that Apple is, indeed, proactively addressing its need for enhanced AI capabilities. Furthermore, it suggests the company is seeking to fortify its position in the rapidly evolving search market.
The Pursuit of AI Talent and Technology
According to Bloomberg’s report, discussions within Apple have involved Adrian Perica, the company’s head of mergers and acquisitions, alongside services chief Eddy Cue and other key AI decision-makers. While these talks are still in their nascent stages and may not lead to a formal offer, they underscore Apple’s pressing requirement for additional AI talent and cutting-edge technology. Apple is taking this crucial step to catch up in the fast-paced generative AI race, where it has sometimes lagged behind rivals.
Addressing the Google Search Conundrum
A primary catalyst for Apple’s interest in Perplexity AI is the company’s ambition to develop its own AI-based search engine. This initiative gains particular urgency given the potential threat to Apple’s long-standing and highly lucrative arrangement with Google. The current partnership, which designates Google as the default browser on Apple devices, generates an estimated USD20 billion annually for Apple. However, this agreement is now under scrutiny from US antitrust enforcers, and the outcome of the ongoing Google antitrust trial could necessitate a re-evaluation of this foundational revenue stream. A Perplexity acquisition could provide Apple with a vital alternative should its arrangement with Google be unwound.
Perplexity’s Appeal and Valuation
Perplexity AI provides real-time, concise answers to user questions by leveraging the latest information from the web. This approach offers a distinct alternative to traditional search engines. The startup recently concluded a funding round that valued it at an impressive $14 billion. Should Apple proceed with an acquisition at or near this valuation, it would mark the largest deal in the company’s history, surpassing its $3 billion takeover of Beats in 2014.
Beyond Acquisition: Partnership Possibilities
The Bloomberg report also highlights that Apple has explored an alternative to outright acquisition: a strategic partnership with Perplexity. Such a collaboration could involve integrating Perplexity as an AI search engine option within Apple’s Safari web browser and embedding its capabilities directly into Siri. Apple’s AI team has been actively evaluating Perplexity’s technology, indicating a strong interest in a close working relationship regardless of the final deal structure.
Competitive Landscape and Industry Impact
The news of Apple’s interest comes amidst a broader scramble for AI talent and technology among tech giants. Earlier this year, Meta Platforms Inc. reportedly attempted to acquire Perplexity before investing in Scale AI. Furthermore, Perplexity is reportedly nearing a wide-ranging deal with Samsung Electronics Co., Apple’s biggest smartphone competitor, for AI features, a development that could add another layer of complexity to Apple’s pursuit.
The potential acquisition of Perplexity AI would not only provide Apple with a significant infusion of AI talent and a recognised brand in the AI space but also a robust consumer product. This strategic move could play a pivotal role in accelerating Apple’s generative AI ambitions, providing a much-needed boost to its Apple Intelligence platform