Reports of Apple’s early-stage talks to acquire Perplexity AI, a fast-growing AI search engine startup, have sparked a key question: Has Apple failed to build its own AI capabilities?
Perplexity AI
For those unfamiliar, Perplexity AI is not a traditional search engine. It’s a conversational AI tool providing direct, synthesized answers with source citations. Think of it as a hybrid of ChatGPT and Google, compiling answers and attributing sources, updated with the latest AI models.
Perplexity’s advantage lies not just in its product, but its strategy. Instead of building its own expensive AI models, it leverages existing cutting-edge models from companies like OpenAI and Anthropic. This allows them to stay agile, minimize costs, and quickly integrate the latest advancements.
This strategy allows Perplexity to prioritize user needs: quality answers, transparent sources, and fast delivery. By focusing on user experience, rather than expensive model development, Perplexity has demonstrated a valuable capability.
Apple’s internal AI capabilities
Saying Apple has “failed” in AI oversimplifies the question. The real issue is whether Apple has developed true capabilities in generative AI.
Apple undoubtedly has substantial resources: a dedicated AI division led by former Google AI chief John Giannandrea, deep machine learning integration across its ecosystem, a strong talent base, and “Apple Intelligence,” a suite of generative AI features unveiled in 2024.
Despite these announcements, many Apple Intelligence features remain in limited preview. Meanwhile, competitors like Google (Gemini) and Microsoft (Copilot) have already launched their generative AI offerings at scale.
Resources are not capabilities. As Roger Martin defines it, capabilities are “activities performed at the highest level” that bring a company’s strategy to life. It’s about consistent, high-performance execution.
Apple has chosen AI as its “where to play,” but its “how to win” remains unclear. While Apple has AI features, they haven’t yet delivered a market-leading user experience or strategic differentiation.
Until Apple consistently outperforms competitors, it only has potential, not true generative AI capabilities. This is the real test Apple faces.
From Having Resources to Building True Capabilities
Does Apple’s pursuit of Perplexity AI signal a complete failure in building AI capabilities? Not quite. While Apple has the resources, it hasn’t yet successfully translated them into consistent, high-level execution in generative AI. Perplexity, on the other hand, possesses this capability. The acquisition, therefore, could be a strategic move to acquire this missing piece rather than continuing a lengthy development process. It suggests Apple is seeking a faster path to success, not admitting defeat.