Apple executives are quietly exploring the possibility of acquiring artificial intelligence startup Perplexity AI, according to sources familiar with the matter. The tech giant’s interest stems from its urgent need to strengthen its AI capabilities and talent pool as it faces mounting pressure to catch up with competitors.
Adrian Perica, Apple’s head of mergers and acquisitions, has been discussing the potential deal with services chief Eddy Cue and other top AI decision-makers within the company. However, these conversations remain in early stages, and there’s no guarantee they’ll result in an actual offer.
The Google Problem and Apple
The timing of these discussions isn’t coincidental. Apple is grappling with a significant challenge to one of its most lucrative revenue streams. The company currently earns approximately $20 billion annually from its partnership with Google, which makes Google the default search engine on Apple devices. This arrangement is now under threat from U.S. antitrust regulators, forcing Apple to consider alternatives.
Acquiring Perplexity could help Apple develop its own AI-powered search engine, reducing its dependence on Google. The startup specializes in providing real-time answers to user questions by pulling the latest information from across the web, exactly the kind of technology Apple would need for a search alternative.
A Competitive Landscape
Apple isn’t the only tech giant eyeing Perplexity. Meta Platforms attempted to purchase the AI startup earlier this year but failed to reach an agreement. Instead, Meta bought a 49% stake in Scale AI for $14.3 billion as part of its efforts to build a “superintelligence AI team.”
The competition extends beyond acquisitions to talent recruitment. Both Apple and Meta are actively pursuing Daniel Gross, co-founder of AI company Safe Superintelligence Inc. Gross has a history with Apple he sold his startup Cue to the company in 2013, which helped form the foundation for early AI features in iOS.
Financial Implications of Apple
Any deal with Perplexity would be substantial. The startup recently completed a funding round that valued it at $14 billion, which would make it Apple’s largest acquisition ever if a deal were struck near that valuation. Apple’s biggest purchase to date remains the $3 billion acquisition of Beats in 2014.
The market has already reacted to news of Apple’s interest. Google shares fell nearly 1% in after-hours trading following Bloomberg’s report about the potential acquisition discussions.
Apple isn’t limiting itself to an outright purchase. The company has also considered forming a partnership with Perplexity instead of buying it. This arrangement could involve integrating Perplexity as a search engine option in Safari and incorporating its technology into Siri.
Apple teams have met with Perplexity multiple times in recent months and have been actively evaluating the startup’s technology, suggesting the company is seriously considering some form of collaboration.
One complication could be Perplexity’s rumored partnership with Samsung, Apple’s biggest smartphone rival. Samsung reportedly plans to announce a deep integration with the AI startup, which could create conflicts if Apple pursues its relationship with Perplexity.
AI Challenge of Apple
The interest in Perplexity reflects Apple’s broader struggle to keep pace in the generative AI race. The company was slow to launch its Apple Intelligence platform and continues to lag behind competitors in key AI features. A planned revamp of Siri has been delayed indefinitely, with the company now targeting a spring 2025 launch.
Recent developments at Apple’s Worldwide Developers Conference revealed relatively modest AI enhancements, including live translation capabilities and a deeper partnership with OpenAI for ChatGPT-based image generation.
Acquiring Perplexity would provide Apple with an immediate infusion of AI talent, a recognized brand in the AI space, and a consumer-ready product. Perhaps equally important, it could help the company attract additional AI talent in an increasingly competitive market.
As Eddy Cue noted during testimony at the Google antitrust trial, the industry is shifting from traditional internet searches to AI-powered tools. For Apple, the question isn’t whether this change will happen, but how quickly the company can adapt to remain competitive.
