Apple’s problems with catching up with its rivals on the AI front are well known. They are such a major issue that there’s even a group of shareholders suing the company over alleged overstating of its AI progress. But according to Apple pundit Mark Gurman, “Apple Inc. executives have held internal discussions about potentially bidding for artificial intelligence startup Perplexity AI.”
Gurman notes that Apple’s leadership has not actually started talking with Perplexity’s management team. Although Gurman is typically a great source of intelligence, there’s a big difference between Apple considering something and Perplexity actually making a deal. It’s worth noting that Meta failed in a bid to buy Perplexity. And Apple’s arrangement with Google, guaranteeing the search giant prime access to Apple’s customers is potentially under threat as Google faces judgement in an antitrust lawsuit.
The case for Apple acquiring Perplexity looks like a simple equation. Apple has AI problems. Perplexity has a great AI solution. Put them together and Perplexity’s owners get a great payday from Apple and Apple fixes its AI problem. Seems easy doesn’t it? A potential marriage made in heaven.
But the reality is very different. Mergers and acquisitions are hard. And with technology companies it’s easy to think that it’s all about solving technical problems. But that is rarely how it plays out.
If we look at Apple history of acquisitions they generally play out like this. Apple acquires a company and it disappears as a seperate entity with its intellectual property and people assimilated into the larger Apple organisation. Siri came to be after Apple acquired a spin-off from a project developed by the SRI International Artificial Intelligence Center. And Apple Silicon was the fruit that came from Apple’s purchase of P.A. Semi and Intrinsity. That strategy goes back to SoundJam and the creation of iTunes and there have been dozens of others.
Apple’s acquisition strategy is all about filling gaps in its own capability. But Apple’s problems with AI are more complex than simply buying some IP and expertise. What Apple needs to do is not only build a better AI capability. They need to integrate it into Siri and across not just one operating system but several as they integrate AI info iOS, iPadOS and macOS to start. And then there are a bunch of apps as well.
Apple’s timeline for achieving this is short and shrinking. Apple would need to initiate discussions with Perplexity, make a deal, ensure it doesn’t fall foul of competition regulators across many jurisdictions and then close the deal. Once that’s done, Apple and Perplexity would need to integrate workforces and then go through the complex task of integrating the technology.
The problem isn’t that Perplexity wouldn’t be a smart acquisition for Apple. The challenge is the timing. Apple needs to fix its AI problem in months, not years. If Apple does follow through on the purchase attempt and it succeeds, the weight of expectation will be mammoth. The market will expect Apple to use what it acquires from Perplexity to make rapid improvements to its AI capability. But the complexity of the challenge is significant and will take more than a few months to overcome.
The weight of expectation could turn what looks like a perfect deal into a marriage made in hell.
Apple’s need to resolve its AI problems is not a strategic objective. It is an operational problem that needs to be solved in motnhs and not years. History tells us that Apple usually acquires companies when they have strategic value and not to solve immediate issues. Could the acquisition of Perplexity be like SoundJam which gave Apple the near instant ability to deliver iTunes? If that’s not possible, Apple will need to consider whether acquiring Perplexity makes sense.
Anthony is the founder of Australian Apple News. He is a long-time Apple user and former editor of Australian Macworld. He has contributed to many technology magazines and newspapers as well as appearing regularly on radio and occasionally on TV.