Perplexity’s Retreat From Ads Signals a Bigger Strategic Shift

Perplexity is abandoning plans to put ads in its AI search product as the industry looks for sustainable business models that won’t hurt user trust. The changes are part of a larger strategic shift for the company, which has long focused on disrupting Google Search’s business.

“Google is changing to be like Perplexity more than Perplexity is trying to take on Google,” said a Perplexity executive at a press briefing on Tuesday. Executives spoke to the press on the condition of anonymity.

Instead of chasing mass adoption, Perplexity will lean into its subscription business, with a focus on becoming the most accurate AI service for developers, enterprises, and consumers willing to pay a monthly fee. The company also plans to make partnerships with device-makers a bigger part of its business moving forward.

The move marks a major change for the company, which was one of the first AI firms to start experimenting with ads in 2024. CEO Aravind Srinivas said on a podcast that year that he predicted ads would eventually be the company’s core monetization engine. “I think with advertising we could be really really profitable,” he added.

Now, executives say they’re changing course because ads could make people mistrustful of Perplexity’s responses. Anthropic offered a similar explanation for not putting ads in its chatbot, Claude, and poked fun at ChatGPT’s ads in a Super Bowl commercial earlier this month.

But there may be other reasons Perplexity is not pursuing advertising.

Early investors in Perplexity once believed the startup could reach hundreds of millions or even billions of users, but the startup’s growth hasn’t met expectations, according to a source close to the company. When the startup raised its Series B funding in 2024, board member and investor Cack Wilhelm said in a blog post that Perplexity was “capable of bringing the power of AI to billions.” Two years later, that goal still seems a long way off.

Data from the third-party analytics firm Similarweb suggests Perplexity had just over 60 million monthly active users across its website and mobile app in January. That’s more than double the users Perplexity had last year, according to Similarweb. People also now access Perplexity via its AI-powered browser, Comet, which Similarweb doesn’t track.

Without accounting for Comet, Perplexity’s user base on web and mobile is less than 10 percent of OpenAI’s ChatGPT and Google’s Gemini, which have 800 million weekly active users and 750 million monthly active users, respectively.

“One of the things that’s starting to become clear to us is that Perplexity isn’t for everyone,” another Perplexity executive told the press.

Advertising has been a strong business for companies like Google and Meta because they have hundreds of millions of free users. Without that scale, ads likely become a less appealing business model.

Perplexity says it’s making hundreds of millions of dollars in revenue, mainly from consumer subscriptions, but it increasingly expects growth to come from enterprise sales.

The AI search startup also seems to be making a more concerted bet on powering other AI services in 2026, with plans to hold its first developer conference later this year. The company’s pitch is that Perplexity can be an orchestration layer on top of AI models from OpenAI, Google, and Anthropic, directing user queries to the best model for a given question.

Perplexity said it has no plans to get rid of its free tier at this time, despite its pullback from ads. One way the company hopes to keep offering products to free users is through partnerships, like the one it has with Motorola, where Perplexity comes preinstalled on consumer devices. Executives hinted that more device-maker partnerships could be on the horizon.

To its credit, Perplexity has consistently been ahead of the curve in developing sticky AI products. Google’s take on AI-powered search, AI Mode, feels quite similar to Perplexity’s original product. Apple and Meta reportedly expressed interest in acquiring Perplexity last year.

“We are very much a consumer DNA company,” said a third executive. “That’s why enterprise users love our products, because it doesn’t feel like clunky enterprise software.”

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