Apple Inc. has been quietly exploring bold moves in the artificial intelligence arena, holding internal discussions about potential acquisitions of two prominent AI startups: France’s Mistral AI and the U.S.-based Perplexity AI. According to a recent report from The Information, these talks reflect Apple’s growing urgency to bolster its AI capabilities amid intensifying competition from rivals like Google and Microsoft. Sources familiar with the matter indicate that Apple’s senior vice president of services, Eddy Cue, has emerged as a key advocate for pursuing such deals, pushing the company to consider larger-scale investments in AI technology.

The discussions come at a pivotal time for Apple, which has historically shied away from massive acquisitions, preferring to build technologies in-house or through smaller buys. Mistral AI, known for its open-source large language models, has rapidly gained traction since its founding in 2023, raising over $600 million in funding and achieving a valuation north of $2 billion. Perplexity AI, meanwhile, specializes in AI-driven search tools that provide conversational answers, positioning it as a potential challenger to traditional search engines.

Eddy Cue’s Push for AI Expansion: Inside Apple’s Strategic Shift

Insiders reveal that Cue’s enthusiasm stems from Apple’s need to integrate advanced AI features into its ecosystem, particularly as devices like the iPhone and Mac face pressure to deliver cutting-edge intelligence. A Bloomberg report earlier this year highlighted initial talks around Perplexity, noting Apple’s interest in acquiring talent and technology to enhance its Siri assistant and search functionalities. These deliberations have not yet led to formal bids, but they signal a departure from Apple’s conservative M&A approach, which has seen only a handful of deals exceeding $1 billion in its history.

Adding to the intrigue, posts on X (formerly Twitter) from tech analysts like Mark Gurman suggest that Apple has been seriously weighing Mistral as a target since at least July, with Gurman noting the company’s internal debates on catching up in AI. This aligns with broader industry sentiment, where Apple’s partnerships, such as its recent tie-up with OpenAI for ChatGPT integration, have been viewed as stopgap measures rather than comprehensive solutions.

Valuations and Competitive Pressures: Weighing the Costs of AI Dominance

Valuation poses a significant hurdle; Perplexity was last valued at around $3 billion, while Mistral’s innovative models could command even higher premiums in a heated market. A piece in 9to5Mac explored Apple’s alternatives if Perplexity falls through, pointing to Mistral as a logical fit due to its European roots and focus on efficient, privacy-centric AI—values that resonate with Apple’s brand. However, regulatory scrutiny looms large, especially with antitrust concerns surrounding Big Tech’s AI land grabs.

Apple’s hesitation is understandable given past experiences, but the stakes are high. Rivals are pouring billions into AI, with Google embedding generative tools across its suite and Microsoft leveraging its stake in OpenAI. If Apple proceeds, acquiring Mistral or Perplexity could supercharge its Apple Intelligence initiative, unveiled at WWDC 2024, by infusing fresh talent and proprietary tech.

Potential Impacts on Search and Beyond: Reshaping User Experiences

Imagine Siri evolving into a Perplexity-like engine, delivering real-time, cited answers without relying on Google’s search dominance—a scenario floated in a Times of India analysis. For Mistral, integration could mean on-device AI models that prioritize user privacy, reducing dependence on cloud processing. Yet, challenges remain: integrating these startups’ cultures and technologies into Apple’s secretive operations won’t be seamless.

As of now, no deals are imminent, per sources cited in MacRumors, which summarized The Information’s findings. Still, these talks underscore Apple’s strategic pivot, potentially heralding its biggest acquisition since Beats in 2014. Industry watchers will be monitoring closely, as any move could redefine competition in AI-driven consumer tech.