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

Apple is in late-stage talks to acquire top talent from computer vision startup Prompt AI, as well as the company’s technology, CNBC has learned.

Leadership at Prompt told employees of the pending transaction at an all-hands meeting on Thursday and said that those who don’t end up joining Apple will be paid a reduced salary, and encouraged to apply for open roles at the company, according to audio that was accessed by CNBC.

The 11-person company was approached by other potential suitors, including Elon Musk’s xAI and Neuralink, executives said in the meeting.

Prompt was founded in 2023 and raised a $5 million seed round that year led by AIX and Abstract Ventures. Co-founders include CEO Tete Xiao, a notable AI researcher with a Phd in computer science from UC Berkeley, and President Trevor Darrell who was a founder of the Berkeley Artificial Intelligence Research (BAIR) lab.

Xiao and Darrell didn’t respond to requests for comment, nor did Apple. Neither xAI nor Neuralink immediately responded to a request for comment.

Investors will get paid some money in the deal but “won’t be made whole,” executives said in the meeting. Prompt employees were asked to refrain from mentioning Apple until further notice while searching for other jobs or updating friends and family on their situation.

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Prompt’s flagship app, Seemour, connects to home security cameras, adding sophisticated capabilities. The technology helps cameras detect specific people, pets and other animals or objects around a household, and to send alerts and text-based descriptions of unusual activity or answer questions about what’s been happening in front of the camera.

Xiao told employees at the meeting that while Prompt AI’s technology and the Seemour app were working well, the business model wasn’t. The company is retiring the Seemour app, and plans to inform users their data will be deleted and privacy protected, executives said.

Silicon Valley’s tech giants have been snapping up top AI talent through acquihires, in part to bolster their AI research and development in a way that helps them skirt regulatory concerns. Apple’s deal for Prompt is much smaller than recent high-profile transactions, such as Meta’s $14.3 billion investment in Scale AI that brought with it the company’s founder and other execs, and Google’s $2.4 billion deal for Windsurf’s CEO and leaders that included licensing fees.

Apple has historically avoided making large acquisitions. In the half-century since its founding, Apple’s biggest purchase was the $3 billion deal for Beats Electronics in 2014. The company prefers to quietly acquire smaller teams and use their talent and technology to develop features for its product lines.

Some analysts have attributed Apple’s relatively slow progress in AI to its unwillingness to make big purchases. Its stock is down 2% this year, badly trailing major indexes and the worst performance among the tech megcaps.

While Apple Intelligence, the iPhone maker’s foray into generative AI, has underwhelmed critics and faced delays, the company achieved technical success with computer vision, especially in its mixed reality headset, Vision Pro. The iPhone also has the ability to decipher what objects, people or pets are in photographs taken by users.

Prompt’s technology and talent are likely to be part of Apple’s HomeKit smart home division.

— CNBC’s Kif Leswing contributed to this report.

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