Raise your hand if you’ve heard this one before:
Apple buys smaller technology companies from time to time, and we generally do not discuss our purpose or plans.
Those 19 words—one imagines them etched in stone somewhere at Apple HQ in Cupertino, Calif.—have served as Apple’s standard statement about acquisitions for years (to the point that tech reporters can recite the phrase from memory).
As far as PR statements go, it’s actually a pretty accurate description of Apple’s approach to M&A. With the exception of 2014’s still-perplexing $3 billion Beats acquisition, Apple likes to buy companies that are small and relatively low profile—typically they’re the early pieces of whatever, longer-term technological puzzle Apple is quietly assembling (which could be anything from the VisionPro to its own line of in-house microprocessors).
The problem for Apple is that there’s only one tech puzzle to assemble that matters today: generative AI. It’s a game changer, with the power to upend even the most dominant of business models. And it’s too late for Apple to start putting that puzzle together on its own. Its biggest competitors, including Microsoft, Google, Meta, and Amazon, have already released AI products, while Apple is nowhere to be seen.
To be a superpower in the age of AI probably requires owning a cutting-edge large language model. That’s not something you can easily build from scratch—especially if you’re trying to build version 1.0 and OpenAI is already about to release GPT 5.0.
All of this is to say that this is not one of those “from time to time” moments in which Apple has the luxury to leisurely collect small AI startups here and there. If there was ever a time when Apple needed to “think different,” and buy its way into the market by acquiring a large company with a working product, this is it.
There’s plenty to choose from—Anthropic, Cohere, and Mistral, to name a few. On the video side of things, there’s Runway. Just a few weeks ago, Inflection AI sold its IP to Microsoft, and much of its AI talent, including cofounder Mustafa Suleyman, joined Microsoft. How different would the landscape look right now if Apple had snagged the Inflection team?
Antitrust is obviously a risk. But Apple can point to a market full of big fish like Microsoft, Google, Meta, Amazon, and Adobe.
It’s not as if Apple doesn’t have the money. Apple ended the most recent quarter with $58 billion in net cash, and it’s giving billions back to shareholders in massive buybacks and dividends. With AI about to transform the tech industry, it’s stunning that one of the most innovative companies on Earth can’t think of a better use for that capital.
Apple CEO Tim Cook has promised to unveil some kind of generative AI product this year—most likely at its global developer conference in June. If Cook pulls an AI rabbit out of his hat, and Apple goes from laggard to contender in an instant, it will be a spectacular move that will cement his legacy as a business leader.
If Apple doesn’t have that rabbit though, the longer it waits to buy its way into AI, the further it will fall behind in a very high-stakes game.
More news below.
Alexei Oreskovic
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Today’s edition of Data Sheet was curated by Rachyl Jones.
NEWSWORTHY
Chatbot for spies. Microsoft has developed a large language model for use by U.S. intelligence services, with the ability to analyze top secret information, Bloomberg reported. The generative AI model is the first of its kind to operate separate from the internet, according to Microsoft.
DALL-E detector. OpenAI is launching a new tool that can identify whether pictures were created with DALL-E 3, the company’s image generation tool, the Wall Street Journal reported. It can accurately detect when DALL-E 3 has been used 98% of the time, though the tool is less accurate when an image has been altered, like when it has been cropped or screenshotted, OpenAI said.
AI diplomacy. U.S. and Chinese officials will meet in Geneva later this month to discuss the use of AI, the New York Times reported. The global powerhouses will seek to establish ground rules about when AI should not be used, including in controlling each country’s nuclear weapons, the Times reported.
IN OUR FEED
“The SEC has been gaslighting the industry for quite a while.”
—Decentralized blockchain Ethereum cofounder Joe Lubin told Wired about how the U.S. Securities and Exchange Commission internally considers Ethereum a security.
IN CASE YOU MISSED IT
Andreessen Horowitz partner says Google is an ‘amazing example’ of employing people in ‘BS jobs’: ‘Half the white-collar staff probably does no real work’, by Eleanor Pringle
Joe Manchin and mining officials slam EV tax credit rule change, calling it a “blank check” to China, by Dylan Sloan
Nintendo teases the Switch’s long-awaited successor as investors stress about bigger-than-expected profit slide, by Bloomberg
AI’s massive appetite for energy will make or break climate-change goals, by Dylan Sloan
Elon Musk urges investing legend Warren Buffett to buy a stake in Tesla: ‘It’s an obvious move’, by Christiaan Hetzner
BEFORE YOU GO
Apple’s AI chips. Apple has largely remained quiet about its plans in artificial intelligence, but according to a report from the Wall Street Journal, the iPhone maker has been developing a new line of chips to run AI software. Apple already produces chips for its iPhones, watches, and Mac computers, but the new semiconductors would live in data centers and support AI models, the Journal reported.
The company is said to be working with Taiwan Semiconductor Manufacturing to design the chips, which if launched, would pit Apple against semiconductor giant Nvidia. Apple declined to comment on the Journal’s story.
