Why Is Apple Eyeing Perplexity? It's About More Than AI
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Apple, a company that has historically shied away from mega-acquisitions, is now internally discussing a potential blockbuster deal for the AI search startup Perplexity. This move isn't just about bolstering its AI capabilities, where it is admittedly behind rivals. It's a direct, strategic response to a growing existential threat to one of its most vital and profitable partnerships: its estimated $20 billion-a-year search deal with Google.
Why is Apple's Google deal so important?
For years, the foundation of search on over 2 billion Apple devices has been a simple, incredibly lucrative arrangement: Google pays Apple a substantial fee to be the default search engine in the Safari web browser. This single deal is estimated to generate roughly $20 billion in annual revenue for Apple, flowing directly into its high-margin services division.
However, this cornerstone partnership is under severe threat. The US Department of Justice has an ongoing antitrust lawsuit against Google, arguing that this very deal is an illegal tactic to maintain a monopoly in online search. If the government succeeds, the agreement could be forcibly unwound, vaporizing a massive and reliable source of profit for Apple overnight. This legal jeopardy is forcing Apple to seriously contemplate a world without its Google cash cow and find a "Plan B."
How does AI threaten the traditional search model?
While the antitrust case looms, a more fundamental technological shift is already underway. AI-powered "answer engines" like Perplexity and OpenAI's ChatGPT are challenging the very concept of search that Google has dominated for two decades.
Instead of providing a list of "10 blue links" that users must click through, these AI tools synthesize information from across the web to provide direct, real-time answers to complex questions. The impact is already being felt. In a stunning admission during the Google antitrust trial in May, Apple's services chief Eddy Cue testified that for the first time ever, searches on Safari had dipped, a trend he attributed directly to users turning to AI. This shift signals that the user habit of "Googling it" is no longer guaranteed.
Why Perplexity? And what would Apple get?
Perplexity has emerged as a front-runner in this new category of AI search. Its service provides conversational, real-time answers to user queries, citing its sources from the web. For Apple, acquiring or partnering with Perplexity would achieve several critical objectives:
An Instant Google Alternative: It would provide Apple with a ready-made, credible AI search engine to plug into its ecosystem if the Google deal is voided.
A Talent Infusion: In a fierce AI talent war, where companies like Meta are reportedly offering nine-figure bonuses, acquiring Perplexity would bring a world-class team of AI researchers and engineers into Apple's fold.
Control Over Its Destiny: Owning its own search technology would reduce Apple's dependency on partners, giving it full control over the user experience and future integration with its hardware and software, like the still-delayed Siri overhaul.
What are the challenges and alternatives for Apple?
An outright acquisition would be a historic move for Apple and comes with major hurdles. Perplexity was recently valued at $14 billion in a private funding round, meaning a takeover would likely cost significantly more, dwarfing Apple's largest-ever acquisition (the $3 billion purchase of Beats in 2014). Such a massive deal would also attract intense regulatory scrutiny.
Because of this, Apple is also exploring alternatives. The company has reportedly met with Perplexity multiple times to evaluate a deep partnership, which could involve making Perplexity a prominent AI search option within Safari and Siri, alongside Google and others. This would be a less costly, less risky way to hedge its bets. However, this path is complicated by reports that Perplexity is nearing its own wide-ranging deal with Samsung, Apple's chief smartphone rival.
The internal discussions at Apple underscore a critical moment for the tech giant. Faced with its own AI development delays, a seismic shift in how users find information, and the potential loss of a $20 billion revenue stream, Apple must now make a defining choice: double down on its own efforts, forge a new alliance, or make the biggest acquisition in its history to secure its place in the new era of search.