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The Briefing: Why Apple Shouldn’t Do a Big AI Deal

The Briefing
Apple shareholders should be glad Eddy Cue isn't running the iPhone maker.͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­
Aug 26, 2025

The Briefing

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Greetings!

Apple shareholders should be glad Eddy Cue isn't running the iPhone maker. As a story we published today revealed, Cue has been an advocate for Apple making big acquisitions—including of Netflix and Tesla in the past—that CEO Tim Cook rebuffed. More recently, Cue has suggested that Apple should do bolder deals in artificial intelligence. The company's executives have talked about an acquisition of AI search engine Perplexity or French model maker Mistral AI, neither of which has moved forward so far. If Apple shareholders are fortunate, Cook will again say no.

It's no secret that in corporate America, big acquisitions can be a great way to lose a lot of money. AT&T, for instance, bought Time Warner in 2018 for $102 billion in stock, cash and assumption of debt. Four years later, when it unwound the deal by spinning off the media firm, AT&T got back about $40 billion, while its shareholders got most of the shares in the new Warner Bros. Discovery, whose value quickly fell. And in tech, Microsoft's 2014 purchase of Nokia's mobile business was a costly disaster that it quickly reversed. That's not to say M&A isn't a valid way to grow, but history shows acquiring a young company for a small price is a better bet.

Hence Google's 2006 purchase of YouTube for $1.2 billion was, it's fair to say, a home run, as was its $3.2 billion purchase of DoubleClick, an ad tech firm that helped make Google a giant in handling the sale of ads across the Web (and eventually got it into hot water with antitrust authorities). Meta Platforms' $1 billion purchase of Instagram in 2012 was another home run. You could say the same of Apple's 2008 purchase of PA Semi, which, as our story today said, "became the foundation for its now critical in-house semiconductor team." 

Aside from the risks of big acquisitions, there's also the question of why Apple should buy an AI company, such as Mistral, rather than partner with an existing player. After all, numerous companies—from OpenAI to Google to Elon Musk's xAI and Meta—have already sunk tens of billions or more to try and dominate the AI model market. Why should Apple do the same, when it could simply license their tech? It has already gone in that direction, striking a deal with OpenAI to integrate ChatGPT with the iPhone, and it is now reportedly talking with Google about a similar arrangement. 

The counterargument is that AI is such an important technology that no big tech firm can risk becoming beholden to others for access to it. But AI is so expensive to develop that the idea of each big company developing its own AI models seems financially ruinous for all concerned. There's a good case to be made that Apple is better off staying out of that fray and pitting the AI firms against each other for the right to get access to Apple's valuable user base through a partnership. Sometimes discretion is the better part of valor.

There's no keeping secrets when Donald Trump is involved. The president spilled the beans about exactly what Meta's much-hyped Louisiana data center is costing—$50 billion, Trump told reporters today during a cabinet meeting. (Given how often these meetings are televised live, you have to wonder if his administration ever gets any work done.)

To give a sense of scale, $50 billion is about 70% of Meta's entire capital expenditure budget for this year!

The price tag is a lot more than the $10 billion original estimate—a figure that the Louisiana government shared, citing Meta. In July, CEO Mark Zuckerberg posted about the data center, called Hyperion, on Meta's Threads service, although he didn't go into details about the price. He did say at the time that Meta was "going to invest hundreds of billions of dollars into compute to build superintelligence."

But a clue that the project was much pricier than $10 billion came from reports earlier this month that Meta had picked two investment firms, Blue Owl Capital and Pacific Investment Management Co., to lead a $29 billion financing for the data center project. 

• Apple announced it will hold an event on September 9, where it will likely announce its iPhone 17 lineup. The most notable of the new devices is expected to be a slimmed-down version of the iPhone. Apple will also likely reveal the standard base and Pro models.

• Sports merchandising company Fanatics is launching an ads business, the company said today. Fanatics has tapped Jeremi Gorman, a longtime advertising executive who has held leadership roles at Netflix, Snap and Amazon, to run the effort as chief revenue officer.

• Trump Media & Technology Group, which runs the Truth Social app, said Tuesday it is teaming up with Crypto.com to launch a publicly listed company that will buy and hold $6.4 billion of CRO tokens, the cryptocurrency issued by Crypto.com.

• Anthropic settled a copyright infringement lawsuit filed by a group of authors. Details were not disclosed.

Check out today's episode of TITV in which we break down the challenges faced by Sequoia's former China arm, HongShan, with our Asia editor, Jing Yang.

Dealmaker was named the "Best in Business" newsletter for its insightful coverage of private technology and the AI hype cycle. Start receiving the newsletter here.  

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