Executives at Apple are weighing the possibility of buying buzzy AI start-up Perplexity, Bloomberg reported on Friday.
Citing anonymous sources close to the matter, the report said that talks within Apple to bid for an acquisition of Perplexity were still in early stages. A spokesperson for Perplexity told Reuters that the company had no knowledge of any acquisition-related plans or discussions.
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If Apple were to go through with the purchase, it would mark the company’s most ambitious and expensive acquisition yet: Perplexity’s latest funding round left the company with a valuation of around $14 billion, according to Bloomberg.
Apple and Perplexity did not immediately respond to requests for comment.
To compete with AI chatbots and Google’s increasing investment in AI search, Apple plans to add AI-powered features to its Safari browser, Reuters reported in May. The move would be bad news for Google, which has paid around $20 billion annually to be the default search engine on iPhones for years. That arrangement is already under scrutiny from regulators as part of the company’s antitrust violations.
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While Google is still the undisputed ruler of search, new generative AI-powered tools like Perplexity and ChatGPT have been rapidly transforming many people’s — especially among younger generations — basic approach to retrieving information online. Google has responded by introducing its own LLM-powered features into its search function, most notably in its AI Overviews feature.
Apple tries to catch up
Many newer start-ups like Perplexity have built their core product around generative AI, which the tech industry and its investors view broadly as the future. Older, more well-resourced tech companies, meanwhile, have largely turned to the arts of investment and acquisition to keep their edge in the burgeoning AI race, as Microsoft did early on with OpenAI.
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Apple has faltered in the AI race compared to its competitors. While its competitors were going all-in on AI, Apple debuted its Vision Pro headset early last year amid much fanfare. Despite the huge amount of R&D resources that went into bringing that product to market, consumer reactions have been tepid, at best.
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After the October rollout of Apple Intelligence, the company’s unique on-device approach to seamless, everyday consumer AI, many features have either not yet shipped or failed to make a lasting impression. Despite announcing several new exciting AI features across its various operating systems, set to arrive in the fall, at WWDC earlier this month, the company has delayed its long-awaited Siri update. Acquiring Perplexity, with its industry clout and expansive user base, could give Apple a much-needed boost.
Perplexity’s meteoric rise
Perplexity was founded in December 2022, barely one week after the public debut of ChatGPT, which sparked an avalanche of consumer and investor interest in generative AI. The company has positioned itself as a new kind of search engine, one that harnesses a collection of large language models (LLMs) to provide a more dynamic and engaging user experience.
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Rather than responding to user queries with a long list of internet links categorized by an algorithm in terms of relevance, Perplexity’s search engine provides summarized responses in natural language, along with links to sources and a list of related follow-up questions.
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The company quickly gained the support of high-profile investors, including Nvidia and Amazon founder Jeff Bezos. At Bloomberg’s Tech Summit earlier this month, CEO Aravind Srinivas reportedly said that Perplexity’s usage is rising by over 20% month-over-month. Before investing in Scale AI, executives at Meta discussed the idea of buying Perplexity, Bloomberg also reported on Friday.
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