Apple Acquires A Company Every 3-4 Weeks. How Does It Go About Making Those Purchases?

Apple Inc. AAPL has gone on an acquisition spree over the past few years, but the tech giant does the acquisitions “small and quiet,” according to a report by CNBC.

What Happened: Apple follows a different strategy compared to the multi-billion dollar deals struck by its big tech rivals, as per the report.

People who have joined Apple through an acquisition or had taken part in the acquisition process told CNBC that the iPhone maker focuses on recruiting talented technical staff from smaller companies that are valued in terms of the number of engineers working there. The tech giant then quickly and quietly integrates those employees into its own teams.  

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Apple uses "acquihires," the process of acquiring smaller companies primarily for its staff, to speed expansion in fields where it requires technical talent or it identifies a specific technology that could set it apart from its rivals, as per the report. Rather than deploying bankers, Apple’s M&A team does due diligence for smaller deals.

The Tim-Cook led company is also said to have conditions on transactions where a certain number of technical employees must join Apple or the deal would fall through.

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Why It Matters: In February, Apple CEO Tim Cook was quoted as saying that the tech giant acquires a company every month or so and has acquired about 100 companies over the last six years.

Apple’s acquisition spree highlights its consistent efforts to catch up with Alphabet Inc.’s GOOG GOOGL Google Assistant and Amazon.com Inc.’s AMZN Alexa. While Apple lags in smart speaker sales, the company dominates in the smartwatches segment.

Apple has also been quietly been working on pushing into virtual reality and augmented space for years. The iPhone maker acquired virtual reality startup NextVR in May last year and followed it up with the acquisition of Spaces, a spin-off out of Dreamworks Animation, in August.

It was reported in March that Apple plans to launch its long-rumored mixed reality headset in the middle of next year, followed by augmented reality glasses by 2025. The VR headset is expected to compete against Facebook Inc.’s FB Oculus and Sony Group Corporation’s SONY PlayStation VR, among others.

Apple also outpaced the rest of the tech industry by acquiring 25 artificial intelligence (AI) startups during the five-year period from 2016 to 2020, it was reported in March, based on research from GlobalData. The company’s acquisition of AI companies is mainly related to improving Siri, the virtual assistant on Apple devices.

Price Action: Apple shares closed 1.5% lower on Friday at $131.46.

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