Why Apple paid billions for a company with no revenue
Q.ai’s technology and talent explain the logic behind the deal.
Apple acquired the Israeli company Q.ai on Thursday night, a startup that few people were aware of prior to the deal. The company was largely unknown even among industry investors and employed around 100 people. The purchase price was not officially disclosed, but estimates place the deal at between $1 billion and $2 billion. Across the industry, the acquisition is widely described as Apple’s second-largest ever, after its roughly $3 billion purchase of headphone maker Beats in 2014.
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, the company that developed the 3D sensing technology acquired by Apple in 2013 and later became the basis for Face ID. Wexler is a former senior executive at OrCam, founded by Professor Amnon Shashua, while Barliya is an artificial intelligence researcher.
One of Apple’s core strengths is audio. AirPods are widely regarded as among the most advanced consumer headphones on the market, and Q.ai’s technology has the potential to significantly enhance them. The company’s uniqueness lies in its combination of artificial intelligence and physics. Unlike conventional audio technologies that rely solely on sound waves, Q.ai has developed a system based on optical sensors that detect micro-movements of facial muscles, skin, and the jaw. This allows the system to understand speech even when a user only moves their lips or whispers softly, without producing audible sound. The ability to detect facial movements also makes it possible to isolate a user’s voice in extremely noisy environments where traditional microphones struggle.
The first surprise
Until now, the acquired company had remained in deep stealth. It never formally announced its existence, did not publicly recruit employees, issued few press releases about fundraising, and largely stayed off both the media and technological radar. According to estimates, Q.ai raised around $100 million, implying a return of roughly ten times for its investors, and possibly more. The company recently explored raising additional capital but was ultimately acquired by Apple instead.
The most prominent 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, Exor, the holding company of Italy’s Agnelli family, Corner Ventures, and Gradient Ventures, Google’s AI-focused fund. Roughly 100 Q.ai employees are expected to join Apple’s hardware division, led by Johny Srouji, Apple’s most senior Israeli executive.
The second surprise
Apple is acquiring a company with no revenue, founded only a few years ago, for a sum measured in billions of dollars. When Apple acquired PrimeSense, also founded by Maizels, for several hundred million dollars, the deal was considered unusually large at the time. In retrospect, it is now widely viewed as a bargain.
The third surprise
Many observers expected Apple to acquire a large, established AI company in order to accelerate its competitive position against rivals such as Google and Meta. Instead, Apple chose to strengthen an area in which it is already particularly strong, hardware and audio, by acquiring a highly specialized, deep-tech company.
Why this is not a surprise
In today’s market, multi-billion-dollar acquisitions have become increasingly common, particularly for companies offering advanced artificial intelligence capabilities, even when those capabilities are not based on large language models. Increasingly, such deals are driven not only by technology, but by talent. In Q.ai’s case, the company brings together a rare concentration of expertise, making the acquisition less surprising than it may initially appear.
