Apple Eyes AI Startup Perplexity in Strategic Move Impacting Google Shares

Introduction

In a bold and potentially paradigm-shifting move, Apple is reportedly exploring a strategic collaboration or acquisition of AI startup Perplexity, a rapidly emerging player in the artificial intelligence space. According to a recent report, Apple’s interest in Perplexity is part of its broader ambition to solidify its position in the increasingly competitive AI race. The news has already sent ripples across Silicon Valley and the tech sector — most notably resulting in a visible dip in Google’s shares.

As Apple ramps up its investment in artificial intelligence following years of cautious entry, the company’s interest in Perplexity showcases a newfound urgency to catch up with generative AI leaders like OpenAI and Anthropic, and simultaneously, recalibrate its relationship with long-time search partner Google.

Who Is Perplexity AI?

Founded in 2022, Perplexity AI has quickly risen to prominence by delivering a novel AI-powered search engine capable of generating real-time, cited answers to user queries — positioning itself as a direct alternative to traditional search engines offered by companies like Google. Its model blends conversational AI with information retrieval, giving users dynamically generated answers without the click-heavy format of search result pages.

Key highlights about Perplexity AI:

• Real-time Generative Search: Perplexity uses large language models (LLMs) to provide contextual, referenced answers instantly.
• User-Centric Experience: Unlike Google, which displays an array of links, Perplexity delivers concise answers backed by sources.
• Impressive Backing: The startup has attracted investments from leading VC firms and tech pioneers including Jeff Bezos and Nvidia.

The startup’s rapid ascent appears to have caught Apple’s attention, especially as Cupertino seeks to reduce its dependency on Google Search, for which it has faced mounting regulatory scrutiny.

Apple’s Evolving AI Strategy

Historically, Apple has been conservative in its public AI endeavors, preferring on-device intelligence via features like Siri and Smart Suggestions. However, the generative AI boom has exposed the need for Apple to innovate faster in areas like:

• Conversational AI and Language Models
• Search Personalization
• Content Summarization and Intelligent Contextual Assistants

With the launch of GPT-driven assistants and Google Bard, users now expect rich, AI-powered experiences from their devices — something that Siri has struggled to provide.

Reports suggest Apple is planning to roll out its own set of AI enhancements with iOS 18, and a partnership or acquisition of Perplexity could play a crucial role in shaping Apple’s next-gen AI ecosystem, possibly through:

• Integration of Perplexity’s AI into Siri, improving contextual understanding and accuracy.
• Replacement of Google as the default search engine, thereby reducing its reliance on Google’s multi-billion-dollar search deal.
• Supporting on-device private AI models with Perplexity’s tech, maintaining Apple’s privacy-first stance.

Impact on Google and the Stock Market

The reported discussions between Apple and Perplexity had an immediate financial effect, particularly on Google parent company Alphabet’s stock. Shares of Google dropped substantially following the release of the report, as investors interpreted Apple’s interest in alternate AI search solutions as a threat to Google’s dominance in this area.

Here’s why:

• Apple currently earns an estimated $15–20 billion annually from Google for making it the default search engine on Safari across its devices.
• If Apple switches to Perplexity or develops its own engine, Google could lose a significant portion of mobile search traffic.
• The move could also accelerate user migration to ad-free, AI-native experiences powered by generative models.

For years, Google has enjoyed a monopolistic status in the mobile search domain thanks to its partnership with Apple. But as privacy concerns, antitrust scrutiny, and evolving user expectations alter the landscape, Apple is evidently exploring roads less traveled.

What Perplexity Brings to the Table for Apple

Aside from being a talented AI search startup, Perplexity offers strategic advantages for Apple across multiple dimensions:

• Younger, nimble tech infrastructure which Apple can scale and customize for its own ecosystem.
• Fresh UX paradigms for AI interactions