Apple acquires tech firm to keep AI data private on the iPhone

GeekWire is reporting that Apple has acquired AI firm Xnor.ai for an estimated $200 million. The website likens the deal to Apple's 2016 purchase of AI firm Turi which reportedly also cost Apple $200 million. Xnor.ai's claim to fame is its ability to offer on-device AI technology. This means that machine learning and image recognition can be offered on a low-power device without having to go through the cloud. The company's co-founder, Ali Farhadi, said back in 2018 that "We’ve been able to scale AI out of the cloud to every device out there."

The three-year-old startup also has developed a method that allows software developers to embed AI code into apps even if they are not knowledgeable in AI coding. It is now up to Apple to keep the company's "AI Everywhere, for Everyone" motto alive. Last year, co-founder Farhadi explained how Xnor.ai lives up to that motto. "We make 'AI everywhere' a reality by enabling leading global brands to run state-of-the-art deep learning models on anything from a $2 battery-less piece of hardware to the cloud. We empower any developer to deploy countless AI models optimized for the edge with just a single line of code, a future where 'AI for everyone' is real."

Some achievements made by the company last year include the development of an AI-chip that can run for years using solar power or a coin-sized button battery, and an AI enabled product that monitors grocery shelves. It also agreed to a deal with smart home camera company Wyze to have its AI-based "Person Detection feature" included on Wyze's cameras. But GeekWire says that it knew something was up with Xnor.ai when Wyze announced that the AI firm had backed out of the deal and that a firmware update coming this month will remove the feature from its cameras. Wyze did add that it will introduce its own version of the "Person Detection feature" later this year.

This type of acquisition perfectly fits Apple's MO. Very rarely does it make a huge splash in M&A preferring instead to purchase smaller niche startups. The largest acquisition ever made by Apple was the $3 billion purchase of Beats Audio announced in May 2014. Last year, Apple spent $1 billion to purchase the smartphone modem business belonging to Intel. Most deals are similar to the July 2012 purchase of biometric firm AuthenTec; that purchase cost Apple $356 million and led to the introduction of Touch ID on the iPhone 5s a year later. Apple actually does a number of these smaller-scale transactions over the course of a year.

Xnor.ai's technology will help Apple continue to promote data privacy on the iPhone. With the newly purchased tech, Apple will be able to keep the data generated by the use of AI applications on the phone and off of the cloud. According to CBInsights, from 2010 through 2019, Apple had acquired 20 AI-related companies. That puts it well ahead of the 14 such outfits purchased by runner-up Google and the 10 bought by Microsoft.

Often, Apple is able to work an acquisition's technology into the first iPhone released a year after the transaction is made. A good example of that is the aforementioned purchase of AuthenTec. Another example goes back even earlier, to April 2010 when the company bought Siri for an estimated $100 million-$200 million. At the time, Siri was an iOS app The very next year, Siri debuted as a virtual digital assistant on the iPhone 4s. Thus, we might see Xnor.ai's on-device AI available on the 2021 iPhone 13.

As usual, Apple has not made any announcements about the transaction.