Apple slows pace of dealmaking even as tech peers plough ahead

NEW YORK: Apple Inc, which used to acquire a company every three or four weeks, has dramatically slowed its dealmaking in the past two years, a sign the tech giant is being more choosy in the face of a shaky economy and heightened government scrutiny.

The company spent just Us$33mil (Rm147mil) on payments connected to acquisitions in its last fiscal year and Us$169mil (Rm753mil) in the first nine months of the current year, according to regulatory filings. That’s down from Us$1.5bil (Rm6.68bil) in fiscal 2020.

Apple is famous for avoiding the kind of blockbuster acquisitions that have enticed its Silicon Valley peers. But the company has spent much of its history snapping up promising startups, some of which formed the basis for popular features such as Siri and Face ID.

Just last February, chief executive officer Tim Cook noted that Apple had acquired 100 companies in the past six years – more than one a month on average.

That deal flow has slowed to a trickle. Apple only made two known acquisitions in 2022: the Uk-based startups Credit Kudos and AI Music.

The first of those two companies developed technology for calculating credit scores, which will likely aid Apple’s efforts to build its own infrastructure for financial products. The latter business used artificial intelligence to generate tailor-made music.

Apple’s only known takeover in 2021 was the purchase of Primephonic, a classical-music streaming service.

Those numbers don’t factor in spending on content for Apple TV+, including purchased shows and distribution deals for Major League Baseball and Major League Soccer, but they stand in stark contrast to the recent big bets made by other tech giants.

Microsoft Corp agreed to purchase Activision Blizzard Inc in January for about Us$69bil (Rm307bil). Alphabet Inc’s Google is buying Mandiant Inc for Us$5.4bil (Rm24bil).

And Amazon.com Inc last week agreed to acquire Irobot Corp, the maker of the Roomba vacuum, for Us$1.65bil (Rm7.35bil).

Of course, Apple has plenty of money to spend if it wants to join the party. It ended last quarter with Us$179bil (Rm798bil) in cash and marketable securities, and it could move quickly if it decides to do a deal.

Cook attended last month’s Sun Valley Conference in Idaho, a popular spot for brokering mega mergers. For now, though, the company has opted to put money toward stock buybacks and dividends.

Apple declined to comment on its acquisition strategy.

Even as tech deals multiply, they’re coming under more regulatory pressure than before. Like some other companies, Apple added language to its annual report last year noting that acquisitions face more risks now.

That includes “failing to obtain required regulatory approvals on a timely basis or at all, or the imposition of onerous conditions,” the company said.

Government scrutiny has only grown since then, with Apple coming under fire for its App Store practices and reluctance to open the iphone’s tap-to-pay feature to outside services.

Other tech giants are under the microscope as well. In July, the Federal Trade Commission (FTC) sued Meta Platforms Inc to stop the acquisition of Within, the developer of a fitness app for virtual reality headsets.

In February, Nvidia Corp walked away from what would have been the biggest chip deal in history after the FTC sued to block it.