Five "Game Change" AI Deals for Apple
As promised, here's the link to the episode of The Talk Show that I recorded with John Gruber at the end of last week. It clocks in at two and a half hours, but if you're at all interested in Apple – and in particular, Apple's current fiasco with AI – I think it's a brisk listen. We cover a lot of ground at a pretty good clip.
We start with Gruber's massively circulated "Something Rotten in the State of Cupertino" (well, after a brief aside about video podcasting) and go from there to the overall state of Apple, the AI situation, the state of Mark Gurman's reporting on Apple, the would-be Mike Rockwell solution, and everything in between.
One bit that I'll call out in particular since I haven't jotted it down anywhere (beyond my notes for this podcast and my original prediction for 2025), the notion of five (big) AI acquisitions that Apple might be thinking about as a "game change" as it were (a reference to the Sarah Palin maneuver by John McCain back in the day that we brought up earlier in the podcast). Granted, Apple doesn't want to execute a maverick move that blows up in their face, as that one did for McCain. But still, if you believe that Apple needs to do something dramatic to get back into the game, as it were, here are five ideas:
- Anthropic – This would be by far the largest deal since the company is both well established and as such, extremely highly valued at $61.5B. So it would probably take $100B+ to get a deal done, and that would make it perhaps the largest M&A deal ever. Apple's current largest deal ever? Beats for um, $3B just over a decade ago. Today, $3B is a seed round for AI – that's nearly not a joke (more on this below). While it does feel like there would be some good potential for cultural and mentality overlap here with Apple, the fact that Google owns 14% of the company and I believe Amazon may own upwards of another 25% is going to be an issue in any acquisition, obviously. So it's just very, very, very unlikely. Still, such an acquisition would put Apple right back in the game immediately.
- Perplexity – This would also be insanely expensive for Apple, as this company is now said to be raising at an $18B valuation – so we're perhaps talking about a deal in the $40B - $50B range to entice everyone to do it. But beyond their good product chops with AI, this company obviously has focused on search from the get-go and that could be extra useful for Apple if and when the Google Search default deal goes away. My hold up, beyond price, is that the founder has been a bit outspoken and controversial in ways that I think range from stepping-in-it to somewhat understandable for a company in this space trying to make waves. Apple, of course, wouldn't necessarily appreciate that gumption, internally.
- Mistral – The great European hope also lacks some of the massive corporate backing of the others (though they have Microsoft and a few others large players with smaller stakes). More importantly, they seemingly lack some of the traction of the other major players right now. Obviously, they've been going about building a bit differently, being more in line with open source than the others. And this could be an interesting use of any cash Apple has overseas. The last round valued Mistral north of $6B, so a deal would probably need to be in the $15B+ range. Decidedly doable. Then again, Apple has basically been at war with the EU – it may or may not be thawing with a regime change – and it's not clear if such a deal would help or hurt that relationship. Or if the EU would ever dare bless it, of course...
- Safe Superintelligence – It seems like any move to bring in Ilya Sutskever's new startup would also take over $50B given where it's valued (apparently north of $30B). But unlike Perplexity, it's not clear what, if anything, they have built yet. The company is just 9 months old! So it would more or less be a team bet. That includes Daniel Gross, the co-founder who also happened to co-found Cue, which Apple acquired back in the day and helped kickstart Apple's AI initiatives. By the way, the co-founder of Cue was Robby Walker, who you may have read about recently as the current Siri lead under John Giannandrea... But the fact that Safe Superintelligence has been on the record as saying they don't aim to productize their work could be a hold up here. Or, in a way, it might help because they could leave it to Apple to use the models for products? With that in mind, might it be better for Apple to invest in them, doing a deal like the one Microsoft intended to do with OpenAI, before ChatGPT blew up and changed the equation (and relationship)?
- Thinking Machines – The newest company of the bunch was started after Mira Murati left OpenAI and we've subsequently been seeing a lot of talent quickly join her. It was reported that her exit was perhaps a reason why Apple ended up not making an investment in OpenAI since she was a key point person for the company, so is it possible that translates directly into a new deal here? Either an investment or an acquisition? The company clearly doesn't have a product yet, but Apple needs talent more than it needs any product. And there's presumably a price that could work here for both sides. The company is said to be raising their "seed" round at a $9B valuation. And given that they're not even six months old, it might take a $20B - $30B+ offer to get them to build within Apple...
Just to be crystal clear, none of these deals seem particularly likely, of course. Simply because Apple, historically, has tended not to do such deals. And it's entirely possible that they could still do some M&A in AI but that it would be a smaller, more under-the-radar deal (or a few of them). Still, if you buy the notion that such a deal wouldn't just be about buying up a product, but instead getting a team in place to build in this space (and perhaps sending a message to the market – certainly the AI talent market with each of these listed), and to shift the mentality internally at Apple, you can almost see this happening. Or maybe I just love spending Apple's money.
John Gruber
