Apple explores AI search future with potential Perplexity takeover: Report

Apple Inc. is reportedly considering the acquisition of Perplexity AI, an emerging player in the artificial intelligence field, as part of its strategy to enhance generative AI technologies and reduce dependence on Google for search functionalities. Sources familiar with the situation indicate that Adrian Perica, who heads Apple's mergers and acquisitions, has engaged in initial discussions with Eddy Cue, the head of services, along with key leaders in Apple's AI division. While these discussions are still in the preliminary phase and no formal proposal has been made yet, this potential acquisition highlights Apple’s urgent need to secure cutting-edge AI technology and talented personnel. Acquiring Perplexity could enable Apple to create its own AI-driven search engine, serving as a strategic counterbalance to its existing agreement with Google, which has come under scrutiny from U.S. antitrust regulators. This partnership, making Google the default search engine on Apple devices, is believed to generate approximately $20 billion annually for Apple, although its future is uncertain amid ongoing antitrust challenges. Currently, Apple has not directly approached Perplexity's leadership regarding a buyout, and Perplexity has stated it is unaware of any acquisition talks. Apple has also chosen not to comment on the matter. Perplexity, valued at around $14 billion following a recent funding round, provides real-time answers to user inquiries by utilizing current web data, positioning itself as a modern alternative to traditional search engines. If a deal were to be reached that aligns with Perplexity's valuation, it would mark Apple's largest acquisition to date, surpassing the $3 billion purchase of Beats Electronics in 2014. The competition for AI expertise is heating up, with Meta also in talks to recruit Daniel Gross, co-founder of Safe Superintelligence Inc. Apple is reportedly trying to persuade Gross to return to its ranks; he had previously sold his startup Cue to Apple in 2013, which significantly contributed to the development of Apple's early AI features. Additionally, Gross's co-founder, Robby Walker, has recently shifted from leading Siri to directing a new Apple initiative called 'Knowledge', aimed at creating a competitor to ChatGPT using real-time internet data. Internally, Apple has conducted several technical evaluations of Perplexity's platform in recent months, contemplating a potential strategic partnership as an alternative to a full acquisition. This could involve integrating Perplexity into Safari as a search engine option and incorporating its functionalities into Siri. During his testimony in the Google antitrust trial, Cue acknowledged Perplexity’s impressive capabilities, noting that the future of internet search is increasingly being influenced by AI-driven solutions rather than conventional search engines.