Today: Jul 22, 2024

Bezos’ Bet: AI-Driven Google Rival Threatening Internet Search Dominance

7 months ago

TLDR:

  • Perplexity, a startup aiming to challenge Google’s dominant position in web search, has received $74 million in funding from Jeff Bezos and venture capitalists.
  • Perplexity uses advances in AI to provide direct answers to search queries, instead of website links, and has attracted a following among tech workers.
  • The startup faces significant challenges in competing with Google, but its innovative approach and growing user base indicate potential for success.

Jeff Bezos Bets on a Google Challenger Using AI to Try to Upend Internet Search

Perplexity, a startup aiming to challenge Google’s dominant position in web search, has won the support of Jeff Bezos and venture capitalists who believe that artificial intelligence (AI) will disrupt the way people find information online. Despite having only been in operation for less than two years and employing fewer than 40 people, Perplexity’s answer engine has already gained a monthly user base of around 10 million people.

The impressive growth and potential of Perplexity convinced investors, including Bezos, to contribute $74 million to the startup, making it the largest fundraise by an internet search startup in recent years. The investment has valued Perplexity at $520 million.

Perplexity aims to differentiate itself from Google by utilizing advances in AI to provide direct answers to search queries, rather than simply displaying website links. The founders believe this approach eliminates the need for users to sift through search results and makes it easier to find relevant information. However, the startup acknowledges the challenges that come with competing against Google, as the tech giant holds roughly 90% of the market share in online search.

Perplexity’s founders emphasize that their reliance on AI and generative AI technology gives them an advantage over larger companies. They have attracted a following among tech workers who are eager to adopt new services using generative AI. The startup offers a paid version of its site for heavy users and has been able to attract users through word of mouth and positive buzz.

Despite its growth and potential, Perplexity will face significant challenges in going head-to-head with Google. The search giant’s parent company, Alphabet, is valued at $1.7 trillion and has invested billions in answering a wide range of queries across multiple languages. Other search startups, such as Neeva, have failed to gain enough traction to effectively compete with Google.

Perplexity is aware of the hurdles it must overcome and maintains its own index of webpages, combining it with AI technology it has developed or obtained from external providers like OpenAI. The company currently charges $20 per month for a more advanced version of its search engine that uses OpenAI’s most advanced technology, GPT-4.

Although Perplexity is not yet profitable, it generates revenue of $5 million to $10 million annually from subscriptions and selling its AI software to other businesses. The startup also hasn’t ruled out introducing ads in the future and plans to reduce costs as it gains more users and analyzes their search patterns.

Overall, Perplexity’s innovative approach to web search, its growing user base, and the support it has garnered from investors like Jeff Bezos signal a potential challenge to Google’s dominance in the industry. While the startup faces significant hurdles, it aims to carve out a niche by offering direct answers to search queries using AI technology.