A report from The Information yesterday offered a variety of interesting details about Apple’s potential acquisition targets in the artificial intelligence category.
One thing I found particularly fascinating in the story was the tidbit that Eddy Cue, Apple’s Senior Vice President of Services, has regularly pushed for Apple to make big acquisitions, only to be shot down by Apple CEO Tim Cook.
Apple, Tesla, and Netflix
The report describes Eddy Cue as “one of the biggest advocates inside Apple for doing more ambitious deals,” saying he plays a “unique role within Apple.”
In particular, Cue reportedly pushed for two major acquisitions that were shot down by Cook: Tesla and Netflix.
Whenever Apple has gaps in its product offerings, his instinct is to look for a deal to fill it, said people who have worked closely with him. In past years, Cue championed acquisitions of both Netflix and Tesla at different times, according to people with knowledge of the matter. Cook shot him down in both cases.
This isn’t the first we’ve heard about Apple mulling a potential acquisition of Tesla. Last year, The New York Times reported that there were acquisition talks between the two companies. Musk himself has also said that he “reached out to Tim Cook to discuss the possibility of Apple acquiring Tesla” during the “darkest days” of the Model 3 development. According to Musk, Cook “refused to take the meeting.”
The Wall Street Journal reported that Cook pitched Musk about Apple acquiring Tesla around that same timeframe. Musk was reportedly interested in that proposition, but on one condition: He serves as CEO not of Tesla, but of Apple entirely. Cook and Musk have both denied having that interaction.
Apple canceled its own Apple Car project after more than a decade and billions of dollars in investment.
Netflix, meanwhile, has been kicked around by analysts for years as a potential Apple acquisition. We haven’t heard any trustworthy rumors about whether there were ever talks between the two companies.
One instance of Cue successfully pushing for Apple to make a significant acquisition came in 2014 when the company acquired Beats for $3 billion. The Information says that Cue convinced Cook that this was a worthy acquisition “despite skepticism from Apple’s old guard.”
Fast-forward to today and Cue is reportedly the biggest champion of Apple acquiring an AI company, with Perplexity and Mistral being the top contenders.
Apple’s Shazam acquisition
One fascinating tidbit in the story is how Apple decided how much to pay for Shazam, which it acquired in 2018 for $400 million.
Per the report, Adrian Perica, Apple’s Vice President of Corporate Development, came up with a clever way to calculate that $400 million price:
While some tech companies have little trouble paying handsomely to acquire startups or talent based on, say, the vision of founders, Perica’s team is determined not to overpay for companies based on buzz and other elusive metrics. In 2018, for example, when Apple bought Shazam, Apple arrived at the roughly $400 million it paid for the music recognition app by calculating how much it was spending on advertising its Apple Music service on Shazam. The app had become a popular channel for people to sign up for Apple Music.
It’s interesting to think about how Apple might be different if Cue had successfully pushed for major acquisitions of companies like Tesla and Netflix. Would we all be driving around in Apple Cars now? Do you think Apple should be more aggressive in acquiring big companies? Should it have acquired the likes of Netflix and Tesla? Let us know down in the comments.
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