AI Startup Perplexity Faces Challenges in Search Business

The artificial intelligence startup Perplexity AI has raised tens of millions of dollars from prominent tech investors, including Jeff Bezos, for its mission to rival Google in the business of searching for information. However, its AI-driven search chatbot is already facing challenges as some news media companies object to its business practices, and tech giants Google and Apple are increasingly fusing similar AI features into their core products.

A representation of AI-driven search

Perplexity CEO Aravind Srinivas has spent much of the past week defending the company after it published a summarized news story with information and similar wording to a Forbes investigative story without citing the media outlet or asking for its permission. Forbes said it later found similar “knock-off” stories lifted from other publications.

“I never said that,” said Bill Rossi, a former member of the island town of Chilmark’s select board, who was falsely quoted in one of Perplexity’s products.

Srinivas told The Associated Press that his company is trying to build positive relationships with news publishers that ensure their news content “reaches more people.”

Perplexity CEO Aravind Srinivas

Perplexity also revealed this week that it has been seeking revenue-sharing partnerships that would pay news publishers a portion of Perplexity’s advertising revenue each time an outlet’s news content is referenced as a source.

Randall Lane, chief content officer of Forbes Media, called the dispute an “inflection point” in the conversation about AI.

“It’s a case study in where we’re heading,” Lane told the AP. “If the people who are leading the charge don’t have a fundamental respect for the hard work of doing proprietary reporting, and keeping people informed with value-added content, we’ve got a big problem.”

Perplexity bills itself as a search engine while “acting like a media company and publishing a story” that only Forbes had reported, Lane said.

Forbes Media logo

Srinivas, a computer scientist and former AI researcher at OpenAI and Google, co-founded Perplexity in the summer of 2022, not long before the AI image-generator Stable Diffusion and OpenAI’s ChatGPT began sparking the public’s fascination with the possibilities of generative AI.

Inspired, in part, by his childhood love of Wikipedia, he described Perplexity to the AP as “like a marriage of Wikipedia and ChatGPT” that can instantly answer a person’s questions without the “huge cluttered mess” of Google’s conventional search results.

Wikipedia logo

The company sells a subscription for premium features and is planning to start an advertising-based service as it grows its user base.

Perplexity relies on existing AI large language models such as those built by OpenAI, Anthropic, and Meta Platforms, the parent company of Facebook; and then “post-trains” them.

AI large language models

The debate demonstrates the “uncertain and challenging times” for online content creators in general and journalism in particular because aggregators only work if publications such as Forbes exist, said Stephen Lind, an associate professor at the University of Southern California’s Marshall School of Business.

Journalism under threat

Using AI as a synthesizing tool works for widespread dissemination of information until “you run out of originals,” he said.

Limitations of AI