Apple reportedly has a secret plan to quickly gain ground in the AI race

Most experts agree that Apple faces an uphill battle to compete in the AI race. The company’s Apple Intelligence platform arrived late, and felt distinctly underbaked even then; Siri is a punchline and improvements to it keep being pushed back; and rivals are pushing forward with ever more impressive features.

Apple would love to find a shortcut to success, and it may have found one. Sources report that the company is giving serious consideration to bidding for the startup Perplexity AI, which would allow it to transplant a chunk of expertise and ready-made technology into Apple Park and leapfrog many of the obstacles it currently faces.

Perplexity runs an AI-powered search engine which can already perform the contextual tricks which Apple advertised ahead of the iPhone 16 launch but hasn’t yet managed to build into Siri. For example, I ran the following three queries consecutively:

• Which Warhammer 40k faction is most fun to play?
• What about painting?
• How do you define advanced?

For the second query, the search engine knew I was asking which Warhammer faction is best for painting, and for the third query, it knew I meant advanced painting and was referring to a phrase in its previous answer. These are simple logical steps, but Siri can’t do this without resorting to ChatGPT. Apple would far prefer to have its own tech for such functions, and thus be able to control the user experience entirely.

Cupertino executives are understood to have held internal discussions about the idea of buying Perplexity; Bloomberg reporter Mark Gurman specifically claims that M&A chief Adrian Perica has spoken about the matter with Eddy Cue and senior members of Apple’s AI team, although he notes that “discussions are at an early stage and may not lead to an offer.” Apple also hasn’t yet spoken to anyone at Perplexity, which has issued a statement denying all knowledge.

In the latest edition of his Power On newsletter, Gurman analyses the potential deal in greater detail. He notes that it would dwarf any previous Apple acquisition: its largest to date was Beats for $3 billion in 2014, whereas Perplexity was recently valued at $14 billion.

Historically, Apple has been wary of large acquisitions, whereas rivals, such as Facebook (buying WhatsApp for $22 billion) and Google (acquiring cloud security platform Wiz for $32 billion), have spent big to scoop up companies. It could be a mark of how worried Apple is about the AI situation that it’s considering such a major and out-of-character move. But after a year of headaches and obstacles, it also could pay off in a big way.