2025-06-23 19:07:08
In his newsletter this week, Mark Gurman throws out the following eight names for would-be M&A for Apple with regard to AI:
I'll just point out that last March, I made the case for four of five such companies:
I'm biased, but my list is still better all these months later (and that's even though I should be biased in the other way, since my wife and I are investors in Sierra and she advises the company!). I just think my list is more drilled in to what Apple actually needs and how they might be thinking about this, as I discussed with John Gruber for his Talk Show podcast at the time. And now the actual reporting – much of it by Gurman himself – has proven that out thus far.
To that end, the only real bit of new actual news in this report is the following:
Separately, Apple met earlier this year with Mira Murati — the former chief technology officer of OpenAI — to discuss a potential deal for her new AI startup, Thinking Machines Lab. The talks never progressed to an advanced stage.
This is not surprising given that we also now know that Meta spoke with Murati as well as a part of Mark Zuckerberg trying to build his new 'Superintelligence' Dream Team. But back in March, I made the following case:
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...
That seed round is now complete. $2B raised – perhaps the largest "seed" ever – at a $10B valuation. And it comes with some truly incredible levels of control for Murati, who undoubtedly learned some vital lessons from her time at OpenAI... This price, while obviously outlandish for a company still in the planning stages for their actual products, still wouldn't put it out of the realm of possibility for Apple. But just as with Perplexity, it would undoubtedly take an offer that's an order of magnitude more than any deal they've ever done...
Speaking of Perplexity, Gurman reported at the end of last week on those talks and I extended my own thoughts on the matter here. I've long thought Perplexity would be the most obvious and perhaps most seamless target for Apple – and in part because it's not just about AI, but also the overall Search story here as well. Something that will be vital if/when the Google Search deal is altered. Which led to my closing remarks last January:
Anyway, Apple should probably just buy Perplexity?
Fast-forward back to my case last March
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.
The valuation ended up coming in at $14B. And that perhaps makes a "mere" $30B deal – again, an order of magnitude larger than the Beats deal a decade ago – still within the realm of possibility. We also now know Eddy Cue has taken a liking to the company – as he said as much in court under oath! Still, as I laid out last week, I think a partnership here is more likely than an acquisition – and Alex Kantrowitz and I discussed this topic on his Big Technology Podcast a couple weeks ago. Beyond the potential personality clashes, the Samsung deal seems like a hurdle...
Still, Perplexity was the name I threw out there in my predictions for 2025 – alongside Mistral. Here's what Gurman had to say about that one:
Unlike the others, Mistral would give Apple a serious leg up in building cutting-edge foundation models. Its high-performance models are widely respected for their efficiency and speed — ideal for running on devices or in the cloud.
I don't know about a "leg up", but it would get them closer to OpenAI, Google, etc. And it would be "open source" work. And a lot of their talent comes from the team that started the Llama work for Meta, but clearly got fed up and left, leading to Meta's current AI situation... But again, I think my case here makes more sense:
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...
They're clearly also fundraising again right now, on the heels of some big EU deals. And they're seemingly in a good spot from that perspective with the rest of the world – and Europe in particular – worried about American dominance in AI. Again, that probably speaks to why Apple wouldn't be allowed to buy them...
It's interesting that Gurman doesn't mention Safe Superintelligence here – perhaps because it's already valued at $32B. But he himself has noted that Apple has tried to convince co-founder and CEO Daniel Gross to come back to Apple rather than go to Meta in another wild "hackquistion". While Meta is "hackquiring" Gross' VC fund, what if Apple "hackquired" his AI startup and got a guy named Ilya Sutskever in the process?
Would Sutskever ever agree to that? No idea. But certainly Apple has to be more appealing to him than Meta would be. And if he needs to hitch his company to a cash wagon... There are worse ideas is all I'm saying.
Speaking of cash wagons, while Gurman dismissed Anthropic (and OpenAI) as being too expensive for Apple – undoubtedly true, certainly with OpenAI, which is why I never brought them up in my piece, despite their partnership with Apple – the bigger barrier might be the fact that Amazon and Google own something just shy of 40% of the company. Said another way, Anthropic already hitched their wagon to a cash partner. As did OpenAI with Microsoft, until that fell apart in (ongoing) spectacular fashion, so now it's largely in the hands of SoftBank.
But yes, I continue to think that one of the following would be the most interesting deal for Apple to do:
Remember, it's not just about product – as the last two, as far as I know, don't yet have any – it's about talent and showcasing to the market that Apple is serious about AI. I don't think they need to "win it" – certainly there's a case to be made for partnering right now, just as they're doing with OpenAI, and soon perhaps Google and Anthropic as well. I just think they need to be some level of player here. And I don't think they want to leave themselves open to be fully at the whims of others – especially if those others are largely aligned with rivals...
That's the real M&A case.
2025-06-23 04:43:30
The tracking was not looking good for this movie, but this is bad, really bad:
But the turnout for “Elio” was worse — much worse — than even Pixar had expected. The film, which cost at least $250 million to make and market, collected an estimated $21 million from Thursday evening through Sunday at theaters in the United States and Canada, according to Comscore, which compiles box office data.
It was Pixar’s worst opening-weekend result ever. The previous bottom was “Elemental,” which arrived to $30 million in 2023.
A month ago, when the “Elio” marketing campaign began to hit high gear, Pixar and its corporate owner, Disney, had hoped that “Elio” would, in the worst-case scenario, match the “Elemental” number. Instead, it fell 30 percent short.
The sad thing here is that the movie is apparently good.1 It would be one thing if Elio was bad, but critics seem to like it and audiences seem to love it – especially the most important audience for this fare: kids. So what gives?
I think, sadly, this is just the new way of things. Barnes sort of hits on it when noting that one reason why sequels and remakes do so well relative to original content is that parents can trust that their money will be well-spent. Tangential to that is the notion that there's simply so much to watch at home that a movie simply must be "special" to get someone – let alone a family – out of the house to see it. And again, sequels/remakes have a clear advantage here.
Which points to a path forward, which I've been harping on for a while, but this box office result underscores it: start a franchise as a streaming property and then "graduate" the sequel to cinemas if/when it does well.2
On one hand, this is depressing as it means that mainly sequels/remakes would populate the box office. On the other, it's reality. Unless a movie has a massive current star – and with animated movies, that obviously matters far less, if at all – it's unlikely to move the box office needle. Yes, there is the occasional break out, and that's great – studios should track for "the Anyone But You effect", where Sydney Sweeney and Glen Powell are garnering a ton of online buzz tangential at best to the actual movie and plan accordingly. But for the most part, new IP starts on streaming to see if it can take hold.
By the way, there's also nothing stopping studios from going to theaters after something starts to take hold on streaming... Hollywood needs to start thinking more outside of the typical boxes (release windows).3
Okay, that all seemingly makes sense. Again, no one in Hollywood wants to hear it because it sounds like the end of (most) new IP in cinemas. But I'm mainly talking about big studio/big budget productions. For more bespoke fare with reasonable budgets and release strategies, there's certainly an argument to be made that there's never been a better time to be making movies. There are so many technological tools now to make the art form far more accessible than it has ever been. (More on this in a minute.) Still, it's hard. Even with stars. Even when the movie is good! If you can't spend $100M to market a movie, it requires almost precision-like marketing. Even Apple keeps failing at this. Apple!
Again, there are and should be plenty of exceptions here – see: Sinners for one even more recent example that clearly tapped into something. But all of this also elevates the status of cinemas even higher as the "major leagues" of film, as it were. Once IP proves itself in the minors, it's called up...
The flaw in my strategy for (major) studios going forward is the fact that Elio cost $250M to make (including marketing). Can anyone, even Disney, really afford to spend that much money on a movie that's going straight-to-streaming? No. Obviously not. They need to bring the budget for such a production down, which again will be hard for Hollywood, and certainly creatives to hear:
The problem for Pixar is that its originals remain wildly expensive. “Ruby Gillman” and “Migration” each cost 50 percent less than “Elio” did. (Pixar movies are still produced entirely in the United States, increasing labor costs. Some other studios have started to rely on overseas production.)
In other words, if Disney/Pixar outsourced the film oversees, they could likely get it done at a much smaller price point. They would certainly argue that it wouldn't be as good – and they're undoubtedly right – but at some point, it's simply a cost/benefit equation. Words that will make the collective industry want to vomit. And that's before AI enters the equation, which the mere mention of will turn the vomiting into full-on norovirus.
But these changes are coming, and so it's silly to just bury your head in the sand and hope that they don't. Better for all the parties to talk and try to work together on solutions here. A movie like Elio simply cannot cost $250M to make in 2025. Maybe the sequel can if it's a huge success on streaming! But there's no guarantees here anymore – even for the Pixar name and brand, sadly.
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1 There was clearly an issue with the original director of the movie, who had to be pulled off.
2 Or, by the way, you can start it as a video game or some other format!
3 Also Disney has a huge potential advantage here thanks to the (relative) strength of Disney+. They should leverage it!
2025-06-21 06:40:17
Well, well, well:
Apple Inc. executives have held internal discussions about potentially bidding for artificial intelligence startup Perplexity AI, seeking to address the need for more AI talent and technology.
Adrian Perica, the company’s head of mergers and acquisitions, has weighed the idea with services chief Eddy Cue and top AI decision-makers, according to people with knowledge of the matter. The discussions are at an early stage and may not lead to an offer, said the people, who asked not to be identified because the matter is private.
To be clear, it sounds like these are very much just internal discussions – i.e. they haven't even broached the topic with Perplexity yet.1 But yeah, at least thinking about/exploring the notion makes sense – and I'm not just saying that because I've been saying it/predicting it for months and months. I'm hardly alone. Apple is behind in AI and one way to catch up a bit faster is through M&A. And Perplexity seemingly has a lot of what Apple would want. And actually, it goes a bit beyond just AI:
Such a deal would help Apple develop an AI-based search engine, part of efforts to cope with the potential loss of a longstanding arrangement with Google. That partnership, which involves making Google the default browser on devices, generates roughly $20 billion a year for Apple — and is now under threat from US antitrust enforcers.
If the Google Search deal goes away – by which I really mean the $20B+ a year payments to Apple from Google goes away – Apple will obviously be more open to looking into other search arrangements. And that's more true than ever before because of the rise of AI and the disruptive effect it's already having on search. Eddy Cue may have had his own reasons for saying as much on the stand during Google's antitrust trial, but that doesn't mean it's not true.
One argument against such a deal would obviously be price. Given that Perplexity is currently valued at $14B and that such a deal would clearly require a premium, this would likely require Apple doing a deal that may be an order of magnitude larger than the current biggest deal: the $3B deal for Beats just over a decade ago.
Another argument against the deal may be co-founder and CEO Aravind Srinivas, who is known to be quite outspoken. Alex Kantrowitz and I discussed this on his Big Technology Podcast las week (about 35 minutes in) – on the topic of yes, if Apple should buy Perplexity. It's hard to fault Srinivas for being so outspoken, he's a startup founder taking on both Big Tech and Big AI – startups with a lot more funding than Perplexity. His job is to get Perplexity's name out there and to recruit, and his tactics seem to be working. That said, it's hard to see someone like that working inside of Apple...
But the biggest problem may be the deal Perplexity just struck with Samsung. This was my exact angle on the news a few weeks back.
All of that may push Apple down a partnership path here versus an acquisition:
Apple has also discussed an alternative plan: teaming up with Perplexity instead of buying it. A partnership would involve adding Perplexity as an AI search engine option in Apple’s Safari web browser and integrating it into Siri.
Apple has met multiple times in recent months with Perplexity, and its AI team has been actively evaluating the technology — a sign that it’s at least considering a close relationship with the company.
If Apple were to buy Perplexity, suddenly partners like OpenAI might be a bit more reluctant to play nicely – something we're immediately seeing as a result of the Meta/Scale deal. So yeah, I'm talking myself out of this one a bit, but that said, if Apple cares just as much about attracting talent, shifting the culture, changing the mentality that got them in this AI mess, and sending a signal to the market...
Also, they now have to consider the possibility that Meta is going to buy every AI company. Including taking a run at, of course, Perplexity.
One more thing:
Apple and Meta have been waging a broader fight for talent. Meta recently engaged in discussions to hire Daniel Gross, the co-founder of AI company Safe Superintelligence Inc. While the discussions between Meta and Gross are advanced, Apple has attempted to persuade him to join it instead.
I would love to know what the pitch was from Apple to Gross. Were they also offering to spend several billion dollars to buy out the stakes in his fund? And did they also want to bring over his partner (and former GitHub CEO) Nat Friedman?
Gross, of course, previously worked at Apple after they acquired his startup Cue and helped them start up their early AI efforts back in the day. His co-founder was Robby Walker, who has been in the news of late because he's still at Apple and has been leading some of the Siri project. Is the pitch to Gross to come reunite with Walker to build AI at the largest consumer company in the world?
In a way, it could be the old Steve Jobs "do you want to sell sugar water for the rest of your life or do you want to come with me and change the world?" pitch. It sort of works if you believe social media is this generation's sugary drinks...
In the end, I suspect the winning pitch from Meta will be more along the lines of tapping into Logan Roy from Succession. "Money wins."
Update June 23, 2025: Some further Apple AI M&A thoughts...
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1 Which makes this scoop all the more wild. Who on Earth is talking to Gurman about clearly priveledged and obviously secretive conversations between two of the most senior people at Apple? Normally this type of M&A chatter leaks out from lawyers or VCs or other tangential players, but this is seemingly not that.
2025-06-19 17:04:54
Meta may have been late to the "hackquisition" market, but give them credit, they're innovating fast. Last week, the Scale AI deal sort of redefined the market by making every "hackquisition" before it look more like a "hackquihire" by comparison. And today brings a new twist:
Meta Platforms is in advanced talks to hire the prominent artificial intelligence investors Nat Friedman and Daniel Gross to help lead its AI efforts, according to a person familiar with the discussions. As part of those talks, Meta is in discussions about partially buying out Friedman and Gross’ venture capital fund, NFDG, which holds stakes in top AI startups and is worth billions of dollars on paper, the person said.
Yes, this would be Meta "hackquiring" not an actual startup, but a venture fund that invests in startups. But while the contours change, the main driving force remains the same: for Mark Zuckerberg to bring on board top talent for their AI efforts. No matter the cost. [See update below for a fun twist.]
So how does one "hackquire" a venture fund? Unsurprisingly, it's complicated:
As part of the talks, Meta is discussing buying out a substantial portion of NFDG’s holdings and cashing out the fund’s limited partners in the process, the person familiar with the discussions said. The social media giant will have minority stakes in the startups that NFDG has invested in, which could include SSI, but it will not get information about and control over these startups, the person said.
Although financial terms of the discussions couldn’t be learned, a partial buyout of the fund could cost more than $1 billion.
This sounds like Meta would be acquiring stakes in the fund from the LPs who own them. But presumably far more important would be buying out the General Partner (GP) stakes in the fund as they control (and are technically controlled by) the actual management company. This means buying out the stakes Friedman and Gross own. And this of course makes sense because Meta needs to entice them to walk away from their fund to join Meta, just as they had to entice Alexandr Wang to walk away from Scale AI to join Meta. Usually that involves money. A lot of it.
But at least partially cashing out the LPs is important too so they don't try to block such a deal. Buying out venture funds happens from time to time, but it's usually under far different circumstances. Still, the one constant would be lawsuits. When people feel like they gave money for something and the deal was changed under their feet, they tend not to like that. Again, money usually solves it.
But that will also lead to an awkward situation, not entirely dissimilar to the Scale issue: Meta will end up owning a bunch of stakes in other, smaller companies in which NFDG invested. Or rather, rights to such stakes, as managed by the fund. That's another complicating element here: it's not like NFDG is going to liquidate their holdings with this deal, seemingly no one would want that. I mean maybe Meta would, but it would be more or less impossible. Perhaps Meta could find another buyer for the stake in the fund they're buying, but again, that would just add another layer of complexity. And like the Scale deal, they probably want to feel like they're getting something (beyond the talent) for all the money...
What the government may think about Meta buying stakes in dozens of AI startups in one fell swoop... we'll see! Sure, they'd all be minority stakes, but well, they're always minority stakes! That's the entire point of the "hackquisition" market...
But none of that is even the most awkward part of this deal! That would be this:
For Gross, the talks with Meta put him in an awkward position with SSI, a startup formed with the goal of building a leading AI company “insulated from short-term commercial pressures.” The startup hasn’t yet launched a product or described in detail what it planned to build.
Gross’ departure for Meta would damage an important investment for some top venture capital firms. In April, SSI raised $2 billion, at a $32 billion valuation, from investors such as Greenoaks, Andreessen Horowitz and Lightspeed Venture Partners. It has also raised money from Sequoia Capital.
SSI is 'Safe Superintelligence', the startup Gross co-founder with one Ilya Sutskever. And the one that yes, is currently valued at $32B – pre-product. Well, that's a bit unfair because it's actually not entirely clear they intend to have an actual product. By at least the early accounts, their main aim is to create "superintelligence" – the artist formerly known to some as "AGI" but which now has been rebranded to mean something beyond AGI since we're apparently close to AGI even though no one yet has an actual definition of AGI. As I wrote – incidentally exactly one year ago – upon the formation of SSI:
I'm reminded of Coca-Cola Classic. That is, the branding the soda company had to go with after the 'New Coke' debacle in the 1980s to let everyone know that the original product they knew and loved was back. 'Safe Superintelligence' sounds a lot like 'OpenAI Original'.
If you've seen the term "superintelligence" in the news recently, it's because that's also the goal for this new team Zuck is putting together for Meta. So yes, Gross will be joining a new team that will be racing his old team. I made the quip last night that perhaps the effort should be called "Unsafe Superintelligence" given that it's, well, Meta. But then I realized that I already made that joke in that post a year ago about OpenAI, for shame.
Anyway, what are those SSI investors going to think about this deal?1 Presumably they care most about Sutskever in this context, but certainly Gross was a key part of that equation and bet as well, he was CEO! And now he no longer will be, it seems. Maybe it gives an opening for his former employer to swoop in to buy SSI? Ilya Sutskever inside of Apple would be something else...
Update June 20, 2025: Well now the above makes a bit more sense – in the sense that Zuckerberg is absolutely ruthless. As Kate Rooney reports for CNBC, the original plan was to "hackquire" Safe Superintelligence itself and/or bring Ilya Sutskever himself on board. When he turned down that offer, Zuck turned to Gross, Rooney reports. Clearly, to get that deal done, Meta had to do this NFDG deal. At least from the outside, this is not the best look for Gross here...
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1 I'll just remind everyone that Marc Andreessen, whose fund is a main investor in SSI, remains on the board of Meta...
2025-06-19 06:29:47
Lo! A mythical beast! An Alexa+ review! In the wild! And it's in The New York Times no less! Okay, technically it's in Wirecutter. And technically it's just a preview. And there have been a couple of these trickling out ever so slowly. And Amazon now says that over a million people have access to the service. But, well, only a few such articles have appeared. So that either implies that Amazon is being very careful how to dish these out – the first preview/review came from someone the company probably didn't realize was a USA Today columnist – or, people just don't really care enough to write about it. Judging from these initial takes, the truth is probably somewhere in between.
From these couple previews – because what else do we have to go on? – it sounds like Alexa+ is both pretty conversational, as promised, and pretty buggy, as expected. The reviewers think it's mostly better, but worse at some things mainly because of the bugs. None of it sounds like a slam dunk of an upgrade, at least not yet. And in some ways, you could see how it might be viewed as a downgrade by some people. As a recent, perhaps slightly too glowing profile of Amazon's Panos Panay made clear, he's not going to fully release Alexa+ until she's ready for prime time. It may be a while yet, it seems.
While reading these reviews, a thought popped into my head: what if this is all a mistake for Amazon? I don't mean the bugs, as those will undoubtedly be resolved. I mean the overall strategy for Alexa here...
2025-06-19 00:08:09
Advertising isn't just the disruption of aesthetics, the insults to your intelligence and the interruption of your train of thought. At every company that sells ads, a significant portion of their engineering team spends their day tuning data mining, writing better code to collect all your personal data, upgrading the servers that hold all the data and making sure it's all being logged and collated and sliced and packaged and shipped out... And at the end of the day the result of it all is a slightly different advertising banner in your browser or on your mobile screen. Remember, when advertising is involved you the user are the product.
Damn, that's a strong statement and bold stance. Who wrote that?
Oh. Well this is awkward.
Those words were written by Jan Koum, the co-founder of WhatsApp. That post, really outlining the core ethos of the company as directed Koum and his co-founder Brian Acton was written exactly 13 years ago. Not even two years later, the company was acquired by Facebook. Yes, the social media giant that made basically 100% of their money from advertising.
Sure, promises were seemingly made about running autonomously and not breaching that user commitment and trust, but obviously Koum and Acton had about 19 billion reasons to do the deal – and actually, far more today, given how much of it was in stock.1 As those promises started to bend and the pressure started to ramp, the founders were gone – sound familiar? – and WhatsApp was just sitting there as an untapped surface...
As it turns out, the best way to ensure your product doesn't get exploited by ads may not be to sell to an advertising company.
Given the move to now show ads within WhatsApp – yes, yes, not in your conversations right now, but we all know which way this goes, which is only in the direction of more ads – it's honestly sort of remarkable that this post is still live on the company blog, as surfaced yesterday by John Gruber. It's just such a damning take down of the company that WhatsApp would ultimately sell to. We can argue about whether they're breaching some sort of actual agreement here with this move, but they're absolutely shattering the spirit of the early company.
That post also kicks off with a quote, actually:
Advertising has us chasing cars and clothes, working jobs we hate so we can buy shit we don't need.– Tyler Durden, Fight Club
As it turns out, maybe you are your fucking khakis.
1The original deal terms called for $4B in cash and $12B in Facebook shares – and potentially $3B more in shares based on earn-outs. At the time of the deal, the stock was trading around $65/share. Today, it's trading at $700/share. Those $15B worth of Facebook shares in 2014 would be worth around $160B today. Remarkably, both Acton and Koum left before they fully vested the earn-outs. They still did okay, I think.
