Apple Explores Perplexity AI Acquisition as Search Landscape Evolves
Apple Inc. executives have reportedly engaged in internal discussions regarding the potential acquisition of artificial intelligence startup Perplexity AI. The talks are at an early stage, signaling Apple’s strategic focus on bolstering its generative AI capabilities and potentially reshaping its future in the competitive search market.
Sources familiar with the matter indicate that Adrian Perica, Apple’s head of mergers and acquisitions, along with services chief Eddy Cue and other senior AI decision-makers, have weighed the idea. While discussions are ongoing internally, no formal offer has been made to Perplexity AI’s management as of yet, and both companies have publicly declined to comment on specific merger and acquisition talks.
Why Perplexity AI? The Context of Apple’s Search Strategy
Apple’s interest in Perplexity is deeply rooted in the rapidly transforming search landscape and potential regulatory challenges. For years, Apple has benefited immensely from a multi-billion dollar agreement with Google, estimated to be around $20 billion annually, which makes Google the default search engine on Safari across Apple devices.
However, this lucrative partnership is under intense scrutiny as part of ongoing U.S. government antitrust proceedings against Google. Should the court void or significantly alter this agreement, Apple would need a robust alternative to replace the substantial revenue stream and provide a competitive search experience.
This potential disruption, coupled with a notable shift in user behavior, underscores the strategic importance of AI-powered search. Eddy Cue’s recent testimony in the antitrust case highlighted a decline in traditional Safari search queries, attributing it to users increasingly turning to conversational AI services like Perplexity, ChatGPT, and others for direct, summarized answers rather than lists of links.
Perplexity AI specializes in this area, offering a consumer-facing AI search engine that delivers natural language responses sourced from real-time web data. This capability is seen as crucial for Apple to develop its own competitive AI-driven search solution.
Perplexity AI: A Sought-After Asset
Perplexity AI is not a small player; it was recently valued at approximately $14 billion following a funding round. An acquisition at this level would represent Apple’s largest deal to date, significantly surpassing its 2014 acquisition of Beats.
The startup has demonstrated considerable growth, reporting over 15 million monthly users and processing 780 million requests in May alone, with query volume increasing by roughly 20% month-over-month. Beyond its free consumer product, Perplexity generates revenue through paid subscriptions (Perplexity Pro, Enterprise Pro) and developer APIs, allowing integration of its core search capabilities into other applications.
Industry observers suggest that acquiring Perplexity could provide Apple with:
A significant infusion of experienced AI talent.
A recognized brand within the burgeoning AI space.
An established consumer-facing AI search product.
Support for future AI recruitment efforts.
A Competitive Race for AI Talent and Technology
Apple isn’t the only tech giant eyeing Perplexity. Meta Platforms Inc. reportedly attempted to acquire the company earlier, but failed to reach an agreement on financial terms. Following the unsuccessful bid, Meta made a substantial $14.3 billion investment for a stake in Scale AI, another AI company. This highlights the fierce competition for leading AI technology and personnel.
Adding another layer of complexity, reports suggest Samsung is nearing a significant partnership agreement with Perplexity, which could potentially limit Apple’s options for an exclusive deal.
Beyond Acquisition: Partnership Possibilities
Given the high valuation and potential antitrust considerations of a full acquisition, a partnership with Perplexity AI remains a viable alternative for Apple. Such a collaboration could involve integrating Perplexity’s AI capabilities directly into Safari as an alternative search option or enhancing Siri responses with Perplexity’s conversational search features. A partnership would likely be less expensive and face lower regulatory hurdles.
While the internal discussions are preliminary and may not result in any formal offer, the exploration signals Apple’s clear intent to aggressively pursue its future in artificial intelligence, particularly in the context of securing its position in the evolving search market amidst regulatory pressures on its existing Google partnership. The timing of this report, coinciding with the latter stages of the Google antitrust trial, could also be strategically significant.
