Perplexity AI pulls the plug on ads to prioritise user trust

In a pivot that challenges the current monetisation playbook for generative AI, San Francisco-based Perplexity AI has decided to abandon its advertising ambitions. According to reports from the Financial Times, the AI search engine is stepping away from the ad-revenue stream it helped pioneer just a year ago.

Perplexity was among the first movers in the AI space to experiment with brand integration, testing a model in 2024 that featured sponsored questions and content tucked beneath its chatbot responses. However, the company began scaling back these features late last year. Executives have now confirmed that the startup will no longer pursue advertising, citing concerns that commercial placements could compromise the integrity of the platform and erode user trust.

This retreat comes at a time when the rest of the industry, including giants like Google and Microsoft, is doubling down on ad-tech integration. For many AI firms, advertising is seen as the only viable way to offset the astronomical costs of maintaining large language models (LLMs) and satisfying investor pressure for profitability.

By distancing itself from the "ad-supported" tag, Perplexity is leaning heavily into its subscription-based business model. While competitors are looking for ways to monetise free users through brand impressions, Perplexity is betting that a clean, ad-free search experience will be its biggest competitive advantage in a crowded market.