Perplexity drops advertising as it warns it will hurt trust in AI

Leading start-ups have recently embraced sponsors as they search for revenue

Perplexity says it's moving away from ads and betting on subscriptions

Perplexity CEO and cofounder Aravind Srinivas. Craig T Fruchtman/Getty Images Perplexity is the latest AI startup to move away from ads, while OpenAI goes all-in. Instead, Perplexity says it's doubling down on its paying users, such as businesses and CEOs. Perplexity says it will take monetization more seriously than it did in the past. Perplexity is going full steam ahead with subscriptions and business sales and plans to focus more on monetization than it has in the past, executives said at a roundtable with reporters on Monday. The AI search startup, based in San Francisco, is the latest to publicly distance itself from putting ads in chatbot answers, with one executive saying it isn't exploring any ad deals at the moment. That's a contrast to OpenAI, which is going all in on ads, while arch-rival Anthropic has publicly touted the opposite. One Perplexity executive said the startup is increasingly targeting large businesses. The company has only five people on its enterprise sales team and plans to ramp that up, the executive added. It also wants to serve high-powered users such as finance professionals, doctors, and CEOs. The focus on selling to businesses positions Perplexity more directly as a competitor to startups like Glean, which lets employees search internal files and data more efficiently with AI. The move comes amid some VC skepticism about Perplexity's prospects, with Silicon Valley investors voting it the company they'd most like to bet against in an informal poll at an AI conference last year, amid back-to-back funding rounds and talks of a wider AI bubble. Perplexity will focus more on revenue and revenue retention than on other metrics, such as the number of questions it answers, the executive said. Perplexity also pledged to keep allowing people to use the product for free, with rate limits. At the roundtable, the company declined to share specific financials and shared that revenue grew 4.7 times last year. Perplexity generated over $150 million in annual recurring revenue by mid-last year, its head of communications Jesse Dwyer told Business Insider in August. It hit $200 million in ARR in October, Alex Heath of Sources reported. The news comes after several months of the AI startup lying low, as Perplexity said in a press invite. The company's leaders said it was busy building and not focusing on AI-related drama. Perplexity had announced in 2024 that it would start experimenting with ads. That effort stalled, with the top ads leader, Taz Patel, quietly leaving last year. One consistent issue with ads in AI-generated answers is that users won't believe them, the Perplexity executive said. Perplexity also launched a product for enterprises in 2024 that uses internal and external data to generate research reports, among other features. Read the original article on Business Insider

Perplexity just 'sided' with Anthropic in its battle with ChatGPT-maker OpenAI, tells everyone...

AI search startup Perplexity has declared it will not feature ads in its chatbot answers, prioritizing subscription and enterprise sales over advertising. This strategy aligns with Anthropic and contrasts with OpenAI's ad-based monetization. Perplexity is aggressively expanding its business sales team to target large organizations and high-powered users, focusing on revenue and retention over user reach.

By TOI TECH DESK