Perplexity’s Withdrawal from Advertising Indicates a Larger Strategic Change

Perplexity is stepping back from plans to integrate ads into its AI search platform as the industry seeks viable business models that maintain user trust. This decision is part of a broader strategic shift for the company, which has primarily aimed to disrupt Google’s search dominance.

“Google is evolving to resemble Perplexity more than Perplexity is attempting to challenge Google,” remarked a Perplexity executive during a press briefing on Tuesday, at which executives spoke anonymously.

Rather than pursuing widespread adoption, Perplexity aims to enhance its subscription model, aiming to be the most precise AI service for developers, businesses, and consumers willing to pay a monthly fee. The company also intends to increase collaborations with device manufacturers as a key business element going forward.

This shift signifies a significant transformation for the firm, which was among the pioneers in experimenting with advertisements in 2024. CEO Aravind Srinivas mentioned on a podcast that year his expectation that ad revenue would become the company’s primary monetization method. “I believe advertising could make us very profitable,” he stated.

Currently, executives indicate that the direction is changing because ads might foster distrust in Perplexity’s responses. Anthropic provided a similar rationale for omitting ads in its chatbot, Claude, and humorously criticized ChatGPT’s ads in a Super Bowl advertisement earlier this month.

However, there may be additional reasons for Perplexity’s reluctance to pursue advertising.

Initial investors in Perplexity once envisioned the startup reaching hundreds of millions or even billions of users, but its growth has not aligned with those expectations, according to a source close to the company. Following its Series B funding in 2024, board member and investor Cack Wilhelm expressed in a blog post that Perplexity had the potential to “bring the power of AI to billions.” Two years later, that ambition still appears distant.

Data from the third-party analytics company Similarweb indicates that Perplexity boasted just over 60 million monthly active users across its website and mobile application in January. That represents over double the users it had last year, as per Similarweb data. Users can also access Perplexity through its AI-based browser, Comet, which Similarweb does not monitor.

A source connected to Perplexity noted that the agent within its Comet browser achieved 2.8 million weekly active users (who were also Perplexity subscribers) in December 2025, down from a peak of 7.8 million earlier that year.

Excluding Comet, Perplexity’s user base on web and mobile accounts for 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 insight we’re gaining is that Perplexity may not appeal to everyone,” another executive from Perplexity shared with the press.

Advertising has proven lucrative for companies like Google and Meta, as they have vast numbers of free users. Without that scale, ads may become a less attractive business model.

Perplexity claims it is generating hundreds of millions in revenue, primarily from consumer subscriptions, but it anticipates that growth will increasingly stem from enterprise sales.

The AI search startup also seems poised to invest more heavily in supporting other AI services in 2026, with plans to host its inaugural developer conference later this year. The company’s proposition is that Perplexity can serve as an orchestration layer over AI models from OpenAI, Google, and Anthropic, optimizing user queries to direct them to the most suitable model for specific inquiries.

Perplexity has stated that it has no intention of eliminating its free tier at this time, despite stepping back from advertising. One way the company plans to continue offering products to free users is through partnerships, such as its collaboration with Motorola, where Perplexity is preinstalled on consumer devices. Executives indicated that additional partnerships with device makers may be forthcoming.