Fear of losing trust: Perplexity dispenses with advertising

Out of fear of losing user trust, the AI startup Perplexity has dispensed with advertising, while competitors like OpenAI with its AI chatbot ChatGPT are taking the opposite approach and testing advertising. This was reported by the daily newspaper Financial Times.

According to the report, Perplexity was one of the first companies in the field of generative artificial intelligence (AI) to introduce advertising in 2024 and display sponsored responses among its chatbot's answers on a trial basis. The advertisements were marked, and Perplexity stated that they had no influence on the chatbot's responses. However, the San Francisco-based company, founded in 2022, began to gradually phase out advertising at the end of last year.

On Tuesday, Perplexity executives told the Financial Times that there were no plans to pursue the use of advertising further. "A user has to be convinced that this is the best possible answer for them to continue using the product and be willing to pay for it," said an unnamed executive at the company. "The challenge with ads is that a user starts to doubt everything... That's why we don't currently see it as sensible to focus on it." They were primarily working on ensuring the accuracy of the in-house chatbot's responses.

According to the Financial Times, Perplexity generates most of its revenue from paid subscriptions. The company offers both free features and paid services ranging from $20 to $200 per month. It claims that more than 100 million people use PerplexityAI; the company, valued at $18 billion, generates $200 million in annual revenue.

Competitors increasingly relying on advertising

Some of Perplexity's competitors are currently pursuing an opposite strategy. For example, OpenAI has introduced advertising in ChatGPT in the United States for the first time. In a test phase, the ads are limited to the free version of ChatGPT and the cheapest paid version, ChatGPT Go, which was launched worldwide in January. The company emphasizes that ChatGPT's responses are not influenced by sponsors. The pressure due to growing competition and losses in the billions seems to have favored the move. OpenAI itself cites economic necessity, arguing that the stable operation of the free and Go versions consumes immense sums for infrastructure.

Google also displays advertisements in its AI mode and in its AI overviews, which contain summaries of traditional search results. However, Google's DeepMind CEO Demis Hassabis stated in an interview just last week that there will be no advertising in Google's AI chatbot and assistant Gemini. Anthropic, in turn, recently confirmed that it keeps its chatbot Claude ad-free.

(akn)