Perplexity AI, a burgeoning artificial intelligence search start-up, has experienced a dramatic surge in both usage and revenue, significantly outpacing its early projections and intensifying competition in the search engine market. The company’s meteoric rise comes on the heels of a substantial $250 million funding round, propelling its valuation to a striking $3 billion.
Since the beginning of 2024, Perplexity AI’s monthly revenues have skyrocketed from $5 million to over $35 million. The start-up reported handling approximately 250 million queries in the past month alone, a stark increase from 500 million for the entirety of 2023. This growth underscores Perplexity’s rapid ascent among generative AI applications, especially following the success of OpenAI‘s ChatGPT launched in late 2022.
Founded by former Google intern Aravind Srinivas just three months before ChatGPT’s debut, Perplexity AI leverages real-time web information to power its search engine. Despite its impressive performance, the company faces scrutiny over its data collection practices, which have drawn criticism for alleged plagiarism and unauthorized web scraping.
Perplexity’s chief business officer, Dmitry Shevelenko, addressed these concerns, highlighting recent efforts to enhance citation visibility and address feedback from critics. The start-up has also transitioned its business model from subscription-based services to advertising, aiming to capture a share of the $300 billion global search advertising market dominated by Google.
As Perplexity shifts focus towards advertising, it finds itself in direct competition with industry giants like Google and OpenAI. Google is advancing its AI capabilities within its core search products, while OpenAI introduces SearchGPT, a new AI search tool currently being tested by around 10,000 users.
Shevelenko remains undeterred by the competitive landscape, emphasizing Perplexity’s unique advantages in speed and specialization. “Our users and team are dedicated to one thing: providing accurate answers to their questions,” he stated. “Competition only sharpens our focus.”
The recent funding round, which included contributions from SoftBank’s Vision Fund 2, AI chipmaker Nvidia, Amazon founder Jeff Bezos, and prominent AI figures like OpenAI’s Andrej Karpathy and Meta’s Yann LeCun, marks a significant milestone for Perplexity. The start-up plans to use these funds to bolster its market position and expand its revenue-sharing agreements with major news publishers such as Time, Der Spiegel, and Fortune.
Shevelenko emphasized the importance of aligning with journalism through revenue-sharing models rather than one-time payments, aiming to create a sustainable ecosystem for accurate and up-to-date information.
Perplexity AI’s rapid growth and strategic shifts reflect its ambition to redefine the search engine landscape and challenge established players, signaling a new era of competition in the AI-driven search market.
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