Apple nears deal to acquire talent, tech from AI startup Prompt AI

Apple is currently in advanced discussions to acquire key talent from computer vision startup Prompt AI, along with the company’s technology, as per sources familiar with the matter.

Management at Prompt informed employees about the potential deal at a company-wide meeting, stating that those not joining Apple would receive a reduced salary and are encouraged to apply for open positions within the company, based on audio recordings obtained by CNBC.

The small 11-person firm had attracted interest from other potential buyers, including Elon Musk’s xAI and Neuralink, executives revealed during the meeting.

Established in 2023, Prompt secured a $5 million seed funding round in the same year led by AIX and Abstract Ventures. The company’s co-founders include CEO Tete Xiao, a renowned AI researcher holding a Ph.D. in computer science from UC Berkeley, and President Trevor Darrell, a founding member of the Berkeley Artificial Intelligence Research (BAIR) lab.

Xiao and Darrell did not respond to requests for comments, and neither did Apple. xAI and Neuralink have yet to provide a statement as well.

While investors will receive some compensation in the acquisition, executives mentioned that they will not be fully compensated. Prompt employees were advised not to mention Apple until further notice while exploring other job opportunities or updating friends and family about their status.

Prompt’s main application, Seemour, integrates with home security cameras to offer advanced functionalities. The technology enables cameras to recognize specific individuals, pets, and objects in a household, providing alerts and text-based descriptions of unusual activities or answering queries about events captured by the camera.

During the meeting, Xiao mentioned that while Prompt AI’s technology and the Seemour app were effective, the business model was not sustainable. Consequently, the company is shutting down the Seemour app and plans to inform users about data deletion and privacy protection measures, according to executives.

Major tech companies in Silicon Valley have been acquiring top AI talent through acquihires to strengthen their AI research and development efforts while navigating regulatory challenges. Apple’s acquisition of Prompt is comparatively smaller than recent high-profile deals, such as Meta’s $14.3 billion investment in Scale AI, which resulted in the acquisition of the company’s founder and other executives, and Google’s $2.4 billion agreement for Windsurf’s CEO and leadership team, including licensing fees.

Apple has traditionally refrained from large acquisitions. In its fifty-year history, Apple’s biggest purchase was the $3 billion acquisition of Beats Electronics in 2014. The company prefers to quietly acquire smaller teams and leverage their talent and technology to enhance its product offerings.

Some analysts attribute Apple’s relatively slow progress in AI to its cautious approach towards major acquisitions. The company’s stock has declined by 2% this year, significantly underperforming major indices and ranking as the weakest performer among tech giants.

While Apple Intelligence, the company’s venture into generative AI, has faced criticism and delays, Apple has achieved significant success in computer vision, particularly with its mixed reality headset, Vision Pro. Additionally, the iPhone excels in identifying objects, individuals, and pets in user-taken photographs.

Prompt’s technology and talent are expected to contribute to Apple’s HomeKit smart home division.

— CNBC’s Kif Leswing contributed to this report.

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