Q.ai’s technology and talent explain the logic behind this deal.
Apple acquired Israeli company Q.ai on Thursday night, but few people knew about the startup before the acquisition. The company was little known even among industry investors and had about 100 employees. The purchase price has not been officially disclosed, but estimates are that it will be between $1 billion and $2 billion. Industry-wide, the deal is widely considered Apple’s second-biggest acquisition ever, after buying headphone maker Beats in 2014 for about $3 billion.
Q.ai was founded by Aviad Maizels (CEO), Dr. Yonatan Wexler (CTO), and Dr. Avi Barliya. Maizels was previously one of the founders of PrimeSense, a company acquired by Apple in 2013 that developed the 3D sensing technology that later became the basis for Face ID. Mr. Wexler is a former senior executive at Orcam, founded by Professor Amnon Shashua, and Mr. Bariya is an artificial intelligence researcher.
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Apple logo.
(Photo: Eve Herman/Reuters)
One of Apple’s core strengths is audio. AirPods are widely regarded as one of the most advanced consumer headphones on the market, and Q.ai’s technology has the potential to significantly enhance that. What makes the company unique is its combination of artificial intelligence and physics. Unlike traditional audio technology that relies solely on sound waves, Q.ai has developed a system based on optical sensors that detect minute movements of facial muscles, skin, and jaw. This allows the system to understand audio even if the user moves their lips without making an audible sound or just whispers quietly. The ability to detect facial movement allows it to separate the user’s voice even in very noisy environments, which is difficult to do with traditional microphones.
Until now, acquired companies have been kept top secret. The company never formally announced its existence, did not publicly hire employees, issued few press releases about fundraising, and received little media or technology attention. According to estimates, Q.ai has raised around $100 million. This means a return of around 10x, or even more, for investors. The company recently considered raising additional capital, but was ultimately acquired by Apple instead.
The most famous Israeli investor is Aleph. Other notable backers include Kleiner Perkins, one of Silicon Valley’s most established venture capital firms. Spark Capital; and GV, Alphabet’s investment arm. Additional investors include Matter Venture Partners, Italy’s Agnelli family holding company Exor, Corner Ventures, and Google’s AI-focused fund Gradient Ventures. About 100 Q.ai employees will join Apple’s hardware division, led by Apple’s most senior Israeli executive, Johnny Srouzi.
Apple is buying an unprofitable company that was founded just a few years ago for billions of dollars. When Apple acquired PrimeSense, also founded by Maisels, for hundreds of millions of dollars, the deal was considered an unusually large amount at the time. Looking back, it is now widely seen as a bargain.
Many observers expected Apple to acquire a large, established AI company to accelerate its competitiveness against rivals such as Google and Meta. Instead, Apple has chosen to acquire highly specialized deep tech companies to strengthen its areas of hardware and audio, where it already has particular strengths.
Why is this not surprising?
Multi-billion dollar acquisitions are becoming increasingly common in today’s market, especially for companies offering advanced artificial intelligence capabilities, even when those capabilities are not based on large-scale language models. Such deals are increasingly driven by talent as well as technology. In Q.ai’s case, the company has brought together a rare combination of expertise, and the acquisition is not as surprising as it might initially seem.
