Apple CEO Tim Cook (photo) said Thursday that his company is prepared to spend more to catch up with competitors in artificial intelligence. This will be achieved by building more data centers or acquiring a larger player in the sector.
Apple is struggling to keep pace with competitors such as Microsoft and Google. These companies have attracted hundreds of millions of users with their AI-powered chatbots and assistants. However, according to Reuters, this growth has come at a high price. Google plans to spend $85 billion next year, and Microsoft is on track to spend more than $100 billion, mainly on data centers. There is a downside to these expenditures. Shareholders regularly react with trepidation to the high costs of AI development.
Apple chose a different strategy. The company relied primarily on external data center providers to handle some of its cloud computing work. And despite a partnership with ChatGPT creator OpenAI for certain iPhone features, the company tried to develop much of its AI technology in-house. Think of improvements to Siri, for example. The results were mixed. The company postponed improvements to Siri until next year.
No major acquisitions
During a conference call following Apple’s third-quarter financial results, analysts noted that Apple has historically not made any major acquisitions and wondered whether the company would take a different approach to pursuing its AI ambitions. CEO Cook responded that the company has already acquired seven smaller companies this year and is open to buying larger companies.
According to Cook, Apple is open to mergers and acquisitions that accelerate its roadmap. Apple would not be tied to a particular size of company, although the companies it has acquired so far this year are small in nature.
There is a reason for this change of course. The tens of billions of dollars it receives from Google each year as payment for being the default search engine on iPhones could be wiped out by US courts in the antitrust case against Google. This comes at a time when startups such as Perplexity are in talks to try to replace Google with an AI-powered browser that would take over many search functions.
Apple executives have said in court that they are considering restructuring the company’s Safari browser with AI-powered search functions. Bloomberg News reported that Apple executives are considering the acquisition of Perplexity.
Apple also said Thursday that it plans to spend more on data centers, an area where it typically spends a few billion dollars a year. Apple currently uses its own chip designs to handle AI requests with privacy controls that are compatible with the privacy features on its devices.