Greetings,

This week, my pick is a story from Aaron Tilley, Wayne Ma, and Valida Pau about Apple's reluctance to make a major move in the AI space. It's a fascinating look inside a company that, despite its massive cash reserves, is staying on the sidelines while its rivals are spending billions on AI deals. This isn't just a business strategy; it's a deep-seated part of Apple's culture, and it could prove to be a significant vulnerability.

Why it caught my eye:

• A Culture of Small Deals: For decades, Apple has preferred to build things in-house or acquire small startups, with only a few exceptions like Beats Electronics. This stands in stark contrast to Meta and Google, which have recently made multi-billion dollar deals to license technology and bring in top talent.
• Internal Pushback: The story reveals that services chief Eddy Cue has been a vocal champion for bolder AI deals, even pitching acquisitions of Netflix and Tesla in the past. But he's been consistently shot down by other top executives, including CEO Tim Cook, who prefer Apple's cautious approach.
• The Problem with Integration: It's clear that Apple's insular culture has made it difficult to integrate outsiders and their ideas. Founders of acquired startups have grown disillusioned, feeling their technologies were stifled, and in one case, a founder even used a countdown clock to his shares vesting so he could resign.

The bigger question here is whether a company can maintain its historic identity and still compete effectively in a new technological era. What happens when the culture that defined a company's past success becomes a roadblock to its future? You can read the full story here.

Best,

Jessica Lessin
Founder & Editor-in-Chief

Apple's Aversion to Big Deals Could Thwart Its AI Push

This summer, investment bankers came knocking on Apple's door with a pitch: Was the iPhone maker interested in doing a major acquisition or some other kind of deal in artificial intelligence?  So far, the only answer it has given them is: not so much.

In the current AI frenzy, nearly all of Apple's peers in big tech have thrown open their wallets to spend billions of dollars on AI deals, including licensing agreements that have allowed them to pluck top talent from startups in the field. But not Apple. The company has, with few exceptions, stuck to small acquisitions throughout its history (it has done around seven such deals this year alone). Some of them have played an important role in the development of its products.