- Apple bought more AI companies than any of its big tech competitors between 2010 and 2019, according to an analysis from CB Insights.
- Many of these purchases have been used to create new features on Apple’s flagship iPhones.
- But others may help power Apple’s shift towards digital products as sales for those services rise.
- As sales of the iPhone have dipped, income from products like Apple Pay and Apple Music may be the company’s future.
- Apple faces some blowback in its push into services. The tech giant is currently dealing with antitrust investigations in Europe and North America stemming from complaints by app makers that the company takes too big a piece from App Store financial transactions.
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Apple CEO Tim Cook believes AI is “fundamentally changing the way people interact with technology” and he has flagged its importance to the company’s future.
Apple’s team of M&A dealmakers has taken Cook’s words to heart: The company has acquired more AI startups than any of its Big Tech rivals over most of the last decade. The string of acquisitions, compiled by industry research firm CB Insights and spotted by PCMag.com’s Jason Cohen, reflects how seriously Apple is taking the AI competition.
The startups are just one facet of a broader AI push at Apple, which coincides with the company’s plans to evolve from a hardware-first business to a subscription-based services business.
According to CB Insights’ data, which tracks the tech companies that made the most AI purchases between 2010 and 2019, Apple took the top spot with 20 acquisitions, followed by Google at 14 and then Microsoft at 10.
Some of Apple’s AI acquisitions have bolstered its hardware business, such as its 2017 purchase of RealFace, an Israeli facial recognition startup, as the company was developing its first iPhone with Face ID unlocking technology.
But other buys, like Shazam in 2017, may help the company’s push into digital services like Apple Music, a growing area for the company as sales flag for its iconic products like the iPhone.
Apple is relying less on income from physical devices; 2019 marked the first year that the iPhone made up less than half the tech giant’s revenue since 2012, partly displaced by increased business for services including its App Store, Apple Pay, Apple Music, and Apple Care.
Apple is poaching AI talent and shopping for startups
While Apple’s Siri voice assistant is sometimes deemed inferior to rival products like Amazon’s Alexa or Google’s Assistant, Apple appears to understand the importance of upping its AI game to compete in a rapidly-changing tech landscape.
In 2018, Apple poached Google’s head of AI, and the company now lists “Machine Learning and AI” as one of 10 main categories on Apple’s job listings web page.
And Apple has continued its buying spree in recent months, scooping up machine learning startup Inductiv in May, Irish natural language firm Voysis in April, and Xnor.ai for a reported $200 million in January.
Siri and Face ID are among the most visible manifestations of Apple’s AI efforts. But AI could eventually play an important role across the various services the company hopes will comprise a greater portion of its business going forward.
When Apple reports its latest quarterly earnings results on Thursday, company executives will provide more details about the push into services — and perhaps of the role AI will play in this effort.
In its fiscal second quarter of 2020 that ended in March, even as Apple’s revenue from iPhone sales fell, services income rose year-over-year by 16 percent. Data compiled by research firm Bernstein, first reported on by Quartz’s John Detrixhe, indicates that Apple Pay is on track to account for 10% of all card payments by 2020. And just between Christmas Eve and New Year’s Eve last year, customers bought a hefty $1.42 billion worth of products through the company’s App Store.
Such moves have not been without blowback. Complaints of anti-competitive practices have led to antitrust investigations in both the U.S. and Europe, driven by app developers who say the 30% Apple takes from every App Store transaction is too large a slice. The company has pushed back by releasing studies it says proves the App Store’s policies leave most of the money for developers and are comparable to other app marketplaces.
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