Apple CEO Tim Cook has indicated that the company is prepared to spend more to compete with competitors in artificial intelligence, either by building more data centers or by buying larger players in the category.
iPhone maker Apple has struggled to keep up with rivals like Microsoft and Alphabet’s Google, as both companies have attracted millions of users with their AI-powered chatbots and assistants. But the success has come at a huge cost, with Reuters reporting that Google plans to spend $85 billion next year and Microsoft is on track to spend more than $100 billion, much of it on data centers.
Meanwhile, Apple has relied on outside data center providers for its cloud computing work and, despite a strong partnership with ChatGPT maker OpenAI for some iPhone features, has tried to develop most of its AI technology on its own, including improvements to its Siri virtual assistant.
On a conference call the same day that Apple reported its third-quarter financial results on July 31, analysts noted that Apple has historically not made big deals and asked whether it might take a different approach to pursuing its AI ambitions. In response to the question, CEO Cook said the company has already acquired seven smaller companies this year and is open to buying more large companies.
“We’re very open to M&A that accelerates our roadmap. We are not stuck on a certain size company, although the ones that we have acquired thus far this year are small in nature,” Apple CEO said. “We basically ask ourselves whether a company can help us accelerate a roadmap, and if they do, then we’re interested.”
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Apple has been acquiring smaller companies with highly specialized technical teams to build specific products, according to Reuters. Its biggest deal was to buy American audio product maker Beats Electronics for $3 billion in 2014, while another was a $1 billion deal to buy a modem chip business from Intel in 2019.
Apple operates eight data centers, and the company said Thursday it plans to spend more on infrastructure, which it typically spends just a few billion dollars on each year. According to Reuters, the company is currently using its chip design to handle AI requests, including privacy controls that are compatible with Apple devices’ privacy features.
Kevan Parekh, Apple’s chief financial officer, did not specify the amount of the expense but said that the cost would increase.
Reuters’s reporting contributed to this article.