Silicon Valley’s tech giants operate in a relentless race for innovation. Staying ahead often means acquiring promising startups to bolster talent, technology, or strategic position. In a striking turn of events last week, two of the biggest players, Apple and Meta Platforms, were simultaneously reported to be eyeing the same target: Perplexity AI, a rapidly rising startup in the artificial intelligence search space.
While major acquisitions are common in the tech world, the parallel interest from Apple and Meta highlights Perplexity’s perceived value. It’s particularly noteworthy for Apple, a company famously known for preferring to build core technologies internally rather than relying on large outside acquisitions. This potential move could signal a significant shift in Cupertino’s often-criticized AI strategy.
Bloomberg initially reported Meta’s approach to Perplexity, a move preceding Meta’s recent $14.3 billion investment in Scale AI. Soon after, another Bloomberg report revealed that Apple also had the San Francisco-based AI startup on its radar. The exact status of these discussions remains unclear – it’s unknown if Perplexity is actively seeking a sale, whether formal acquisition talks have occurred with either tech giant, or how close any potential deal might be. Public confirmation may only arrive with an official announcement.
Both Apple and Meta are investing heavily in AI, competing fiercely against dominant forces like Google and Microsoft-backed OpenAI. The shared interest in a relatively smaller company like Perplexity suggests its technology and talent are seen as potential game-changers capable of supercharging their respective AI ambitions.
What Makes Perplexity AI So Appealing?
Founded in 2022 by a team including Arvind Srinivas, Andy Konwinski, Denis Yarats, and Johnny Ho, Perplexity AI initially aimed to democratize knowledge access. While initially dismissed by some as merely an “AI wrapper,” it has quickly evolved into a formidable AI-driven search engine and conversational chatbot.
Perplexity’s primary strength lies in its unique approach to search. Unlike traditional search engines that return lists of links, Perplexity provides direct, conversational answers to user queries. It transforms searching into a natural conversation, allowing follow-up questions and query refinement. Crucially, its responses are backed by numbered footnotes linking directly to source websites, offering a layer of transparency often lacking in AI summaries.
The platform leverages powerful large language models (LLMs), including its own Sonar model, offering users choice and flexibility. This ability to rapidly integrate and build services on top of advanced LLMs has fueled its impressive growth. As of mid-2024, Perplexity reportedly boasts around 15 million monthly users and has seen query volume increase by 20% each month, processing 780 million requests in May alone.
Perplexity’s emergence is particularly significant in the search engine market. Praised by users and insiders, it’s seen as a serious challenger to Google’s long-standing dominance. User frustration with traditional search results often perceived as cluttered with low-quality content has led many to seek alternatives on platforms like Reddit or TikTok. While Perplexity and ChatGPT haven’t dethroned Google, user behavior is clearly shifting towards AI-powered information discovery.
Despite its rapid ascent, Perplexity has faced controversies, including accusations from publishers of bypassing paywalls and improper content use. However, the buzz around the company and its technology remains high, reflected in its valuation exceeding $14 billion.
Apple’s Strategic Need for Perplexity
Apple, despite being an early AI pioneer with Siri, is widely considered to be lagging behind competitors in the current generative AI race. The company’s recent AI showcase at WWDC 2024 was seen as underwhelming by many, and the anticipated major overhaul of Siri has been delayed. Critics point to a potential lack of clear strategy or execution in the AI domain compared to rivals.
Acquiring Perplexity AI could be a pivotal move for Apple to accelerate its AI development. Instead of spending years building equivalent technology and amassing talent internally, purchasing Perplexity could instantly provide Apple with ready-made AI tools, a recognized brand name, and a proven consumer-ready product along with a valuable pool of AI experts. Perplexity’s existing features, such as conversational answers and source citations, offer functionalities Siri currently lacks and would take significant time for Apple to replicate from scratch.
Beyond merely enhancing Siri, integrating Perplexity’s technology could lay the foundation for Apple to develop its own native AI search engine. This is critical strategically, particularly given Apple’s lucrative, multi-billion dollar annual deal with Google to be the default search provider on iPhones. This agreement is currently under scrutiny in a major US antitrust trial. Apple’s Senior Vice President, Eddy Cue, even testified during the trial about previous discussions with Perplexity regarding Safari integration. Should regulatory pressure jeopardize the Google partnership, an acquisition or strategic alliance with Perplexity could provide Apple with a viable alternative and reduce its long-term dependence on its search competitor.
While Apple is known for smaller, talent-focused acquisitions (its largest being Beats for $3 billion in 2014), the potential need for accelerated AI capabilities might push it towards a larger deal. However, internal discussions reportedly include considering a partnership as a less expensive and less regulatorily risky alternative to a full acquisition. Regardless of the method, leveraging Perplexity’s unique search experience, which already resonates well on iOS devices, aligns with Apple’s focus on integrating AI seamlessly into its hardware-first ecosystem while prioritizing user privacy.
Meta’s AI Pursuit and Talent Grab
Meta, in contrast to Apple, has a history of large-scale, successful acquisitions like Instagram and WhatsApp. CEO Mark Zuckerberg is under significant pressure to demonstrate Meta’s ability to compete and win in the AI race against OpenAI and Google’s parent, Alphabet. This urgency explains Meta’s aggressive spending spree on AI infrastructure, hardware, and talent, even at the peak costs of the current AI boom.
Meta’s pursuit of Perplexity is part of a broader effort to assemble a “superintelligence team” capable of realizing Zuckerberg’s vision of building new computing platforms powered by advanced AI. Despite vast resources and significant talent within the company, Meta’s progress in core AI models, like its Llama family, has sometimes been perceived as slower compared to rivals.
Meta has openly pursued top AI talent, with OpenAI CEO Sam Altman even revealing massive offers, including signing bonuses up to $100 million, made by Meta to recruit OpenAI employees. Meta also reportedly attempted to acquire Safe Superintelligence Inc., co-founded by former OpenAI chief scientist Ilya Sutskever, and is now reportedly hiring executives from that startup, including Daniel Gross (whom Apple is also reportedly interested in).
Acquiring Perplexity would be strategically valuable for Meta in enhancing its existing Meta AI assistant, which serves over a billion monthly users across its applications. Perplexity’s conversational capabilities and real-time information access could make Meta AI significantly more personalized and effective, particularly for voice interactions crucial for future computing platforms like VR headsets and smart glasses.
The Outcome Remains Unclear
Both Apple and Meta see clear strategic advantages in acquiring or partnering with Perplexity AI. Apple could accelerate its AI development, enhance Siri and search, and potentially reduce its reliance on Google. Meta could boost its AI talent, improve its Meta AI assistant, and advance its quest for next-generation computing platforms.
Perplexity AI, with its innovative conversational search technology, strong user growth, and high valuation, has become a highly sought-after asset in the intense battle for AI dominance. Whether Arvind Srinivas and his team will remain independent, be acquired by Apple in a landmark deal, or join Meta’s AI empire, highlights the significant value placed on its unique capabilities in redefining how users access information in the age of artificial intelligence. For now, the tech world watches to see which titan, if any, will successfully woo the AI search darling.
