Apple needs to jump start its AI strategy and the only way it's going to get there is through acquisitions. Here's why a purchase of Perplexity makes sense and why Apple may want to keep shopping.
Bloomberg reported last month that Apple was discussing a purchase of the AI search startup.
Let's look at why an Apple purchase of Perplexity, reportedly valued at about $14 billion or so, would make sense.
Apple needs an AI strategy and story. Let's state the obvious: Apple is an AI laggard. Apple's miss on AI is as bad as Microsoft's fail on mobile. I don't think Perplexity will be a magic AI elixir for Apple, but CEO Tim Cook needs a story. Dropping $20 billion on Perplexity is worth it just due to the market cap bump and storyline.
Apple can and should pay up for AI plays because it has to. Would Apple's acquisition of Perplexity be its largest ever? Sure, but Apple has a $3 trillion market cap. Apple bought Beats for about $3 billion in 2014 and had a market cap of roughly $600 million based on news reports at the time. Apple could take $100 billion and spread its bets. There's no shame in buying an AI strategy. If Salesforce can pay $27.7 billion for Slack in 2020, Apple can drop some dough on AI plays. Some will work and others won't.
Like any sports team trying to climb out of the basement, Apple needs to overpay for talent.
Perplexity is a media company that will need content licensing and advertising. If you use Perplexity Pro you get the feel that it's part LLM, part Google News, part search, part answer engine and service. I could see Perplexity folding into Apple News easily, leveraging the advertising business and becoming another $20 a month service to keep you in the ecosystem. Perplexity is even cooking up a browser.
And Apple has relationships with publishers that can keep Perplexity out of courts on a perpetually.
Apple needs an AI platform for developers. Yes, Apple has a devoted developer following but needs to hedge its bets and keep them interested. AI is that hedge. Perplexity would hopefully rev up the developer base.
The Google relationship with Apple may not last. One of the big arguments against the Apple purchase of Perplexity is that it would jeopardize search revenue from Google. First, those funds may not last in the future due to either regulation or competition. Besides, Apple and Google have been competitors and business partners for years.
