LOS ANGELES, USA – Back in 2014, Dr Dre’s brash social media boasting cost him $200 million in what was then the most expensive acquisition in Apple’s history – the purchase of Beats Electronics.
According to the recent book about Apple, “After Steve: How Apple Became a Trillion-Dollar Company and Lost Its Soul” by Tripp Mickle, the incident led to a significant reduction in the purchase price of the music company.
In May 2014, rumours circulated that Apple was closing in on a $3.2 billion acquisition of Beats Electronics, which promised to make founders Dr Dre and Jimmy Iovine billionaires.
However, that night, Dr. Dre and Tyrese Gibson, celebrated prematurely in a video posted on Facebook, declaring Dr Dre as the first billionaire in hip-hop. This proclamation alarmed industry insiders, fearing the premature announcement could jeopardize the deal.
In the 2017 HBO documentary, “The Defiant Ones,” Dr Dre admitted the incident was one of the most embarrassing moments of his life, while Iovine feared that “the deal could blow.”
Three weeks later, Apple officially announced the deal for a final price of $3 billion – $200 million less than the initial rumored amount. Although significant price adjustments are common in such acquisitions, it later emerged that this particular cut was a direct response to Dr. Dre’s untimely video.
The story unveiled in Mickle’s book details how Apple’s CEO, Tim Cook, handled the situation. Cook, who was primarily interested in Beats’ human-curated playlists as a solution to Apple’s struggling entrance into the streaming music business, felt that the Beats team would “infuse an Apple service with the sensibilities of music lovers and artists.”
However, Dr Dre’s indiscretion did not go unnoticed by Cook. Despite the setback, rather than scrapping the deal entirely, he opted to adjust the terms, shaving around $200 million off the original price, which was enough to prevent Dr Dre from becoming a billionaire.
Despite Apple never formally commenting on the revised price, it was understood within Beats that the reduction was a direct consequence of Dr Dre’s premature announcement, as per Mickle.
While it’s unclear whether keeping Dr Dre out of the billionaire club was Cook’s explicit intention, it is evident that Apple’s CEO was not willing to overlook Dr Dre’s blunder.
The incident serves as a cautionary tale about the potentially costly implications of premature announcements, especially within the tech and business world’s high-stakes negotiations.
