Apple’s Acquisition Aversion: Why the Biggest Company Doesn’t Make the Biggest Deals

February 16, 2017

Apple has never been known as an acquisition company. Sure, they do deals, but they’re rarely huge. Seems strange for a company that could buy almost anything in all-cash, doesn’t it?

Turns out Apple’s corporate culture does not lend itself to big or frequent deals, despite its wide financial safety net—we’re talking about $247 billion in cash here, folks—and this could cost the company majorly down the road.

In an article addressing this very concern, Bloomberg sums up Apple’s shortcomings nicely:

Apple has struggled for years to pull off bigger deals because of a series of quirks: an aversion to risk, reluctance to work with external advisers like investment banks and inexperience in closing and integrating large takeovers, said people who have worked on acquisitions with the company.

The largest deal Apple has ever done was to the tune of $3 billion when it acquired Beats in 2014. Second to that? A considerably more modest $400 million acquisition of NeXT Computer back in the mid-90’s.

To compare, Bloomberg looked at Facebook. The much younger, much smaller company has made multiple billion-dollar acquisitions, including spending a whopping $22 billion on WhatsApp. Google and Microsoft have also made several more billion-dollar deals than Apple—again, despite having much less cash with which to spend.

Lately Apple has shifted its cross hairs to online video as the company looks to make Apple Music stand out from the crowd. It’s the right idea: Tim Cook wants to bolster his company’s services revenue, which seems to grow every quarter, and that’s a smart move, as it will lessen Apple’s reliance on white-hot iPhone sales.

But that’s a big, challenging market to enter. So why won’t Apple pull the trigger to accelerate its own progress?

Companies that some analysts have suggested Apple acquire include Netflix, Walt Disney, and Tesla—a massive, landmark deal that thoroughly diversifies Apple’s revenues streams and positions the company as a leader in a new space. If Apple doesn’t, someone else will, and Tim Cook will be known as the Steve Jobs successor that let success slip through his fingers.

A big acquisition might be a mistake. But no acquisition is certainly a mistake.