Perplexity AI Secures $74M Investment to Challenge Google and Microsoft Bing with Its AI-Native Search Engine

ByYasmeeta Oon

Jan 8, 2024


Today, we take a closer look at California-based Perplexity AI, a year-old startup that is spearheading a revolutionary approach to knowledge discovery with an AI-native search engine. This innovative company has recently announced a significant milestone, securing $73.6 million in a Series B round of funding. This substantial investment is backed by a consortium of influential firms and individuals including IVP, NEA, Databricks, Nvidia, Bessemer Venture Partners, Kindred Ventures, and several tech visionaries such as Amazon’s Jeff Bezos, Elad Gil, Nat Friedman, Tobi Lutke, and Guillermo Rauch.

Perplexity AI’s vision is to challenge the status quo in the search engine market, traditionally dominated by giants such as Google and Microsoft. With its AI-driven search engine, Perplexity aims to deliver an enhanced, AI-native experience that could potentially transform how users search and discover information online. The company offers a unique knowledge search platform that seamlessly integrates web indexes with a diverse array of AI models. This combination aims to provide comprehensive and precise answers to any query a user might have. Unlike traditional search engines that often require sifting through multiple links and ads, Perplexity’s platform is designed to be entirely conversational, offering a streamlined and efficient user experience.

The heart of this innovative approach lies in the conversational nature of the search process Perplexity AI proposes. Instead of the usual list of links and the need to navigate through ads or irrelevant information, users engage in a dialogue with the search engine. They receive direct, concise answers to their queries, with the option to delve deeper into the topic through the most relevant sources and citations provided alongside the results. This method not only simplifies the search process but also significantly reduces the time and effort users spend looking for accurate information.

One of the critical aspects that set Perplexity AI apart is its commitment to accuracy and transparency, especially vital in an era increasingly concerned with misinformation and AI-generated content. The company’s founders emphasize that their platform is built on the principle that these are prerequisites for a trustworthy and widely adopted AI-powered search tool. By focusing on delivering accurate and transparent results, Perplexity aims to ensure that users can rely on the information provided, fostering trust and reliability in their platform.

Perplexity AI has introduced a tiered offering to cater to different user needs. The platform’s free version allows users to perform searches using the company’s default model. For users requiring more advanced features or better results, Perplexity offers a Pro version, billed at $20/month. This premium tier provides the ability to select preferred AI models, including the latest such as GPT-4, for enhanced search results. Additionally, Pro users gain access to Perplexity API credits, enabling them to integrate the company’s powerful AI models into their projects, and unlimited querying support for Perplexity Copilot, the company’s interactive research assistant.

Copilot is another standout feature of Perplexity’s platform. It revolutionizes the search experience by tailoring search queries with custom follow-up questions, effectively introducing the concept of generative user interfaces. This feature removes the burden of prompt engineering from the user, allowing for more natural and intuitive interaction with the search engine. Users don’t need to craft perfectly phrased questions to get the answers they seek. Instead, Copilot guides them through the process, enabling them to uncover more relevant and comprehensive answers than what might be possible with other AI chatbots, traditional search engines, or research tools.

Since its launch a year ago, Perplexity AI has witnessed significant growth, boasting 10 million monthly active users and over a million mobile users. The platform has served over half a billion queries in 2023 alone, with Copilot gaining particular traction among academics, students, and knowledge workers who rely heavily on research. Despite these promising figures, it’s worth noting that Perplexity AI still has a long way to go in achieving its core mission of serving “the entire planet’s unbounded curiosity.”

One of the most significant challenges facing Perplexity is the competition from established players like Google and Microsoft, both of which have billions of users and are already incorporating generative AI into their search engines. Google Search, for instance, is testing its new Gemini model, which has reportedly reduced response latency by 40% for English queries in the U.S. Meanwhile, Microsoft Bing has integrated OpenAI’s GPT-4 for information search and DALL-E 3 for image generation. However, both these giants continue to rely heavily on traditional search engine features like links and ads, which Perplexity does not.

Looking ahead, it will be fascinating to watch how Perplexity AI builds on its unique offerings, such as model flexibility and a conversational search experience, to challenge these industry behemoths. The company’s success will depend on its ability to continue innovating and providing a superior search experience that appeals to users’ evolving needs and preferences in the age of AI. With its ambitious vision and the backing of influential investors, Perplexity AI is well-positioned to make a significant impact on the future of knowledge discovery and search. As AI continues to advance and permeate various aspects of our lives, the quest for a more efficient, accurate, and user-friendly search engine becomes ever more critical. Perplexity AI’s journey represents not just a business endeavor but a step towards redefining how humanity interacts with information in an increasingly digital world.

Yasmeeta Oon

Just a girl trying to break into the world of journalism, constantly on the hunt for the next big story to share.