Perplexity AI Raises $500 Million, Reaches $9 Billion Valuation
Perplexity AI, an upcoming AI search engine, is reportedly nearing completion of a behemoth round of funding worth $500 million, valuing the company at $9 billion, This is up some $6 billion from what it was valued in the June funding round of some $3 billion. Institutional Venture Partners, the Bay Area venture capital firm reported to be leading this new funding round.
Founded to concentrate on giving AI-driven search functionality, the company directly competes with heavyweights like Google, Bing from Microsoft, and the OpenAI, which produced the viral chatbot, ChatGPT. Since its inception, the company has generated much interest in investors’ circles, especially after the increase in interest in generative AI technologies. It started off the year valued at just $500 million and over the past few months, it has completed several rounds of funding, which helped fuel rapid growth and expansion.
Perplexity vs. ChatGPT and Google
This perplexity rise at the time when AI revolutionizes the search and online content consumption. OpenAI’s newest addition to its feature for the new version of its product, ChatGPT, is accessing real-time web data: live scores from sports events, updating of stocks, news and updates, and weather info. That really brings the chances of competition with a close distance with traditional search engines-both Google and Microsoft Bing-along with the rising startup, Perplexity.
Even amidst competition, Perplexity continues to have its niche in a relatively overcrowded AI search environment. This platform, powered by the advanced AI models, hopes to offer much more conversational and contextual search results and is set to separate themselves from the traditional engines which rely merely on keyword and links in ranking content.
Controversy and accusations of plagiarism
However, Perplexity’s growth in speed has not been without its controversy. The startup has taken the brunt of plagiarism accusations. The New York Times sent a “cease and desist” letter to Perplexity in September, claiming that the company was scraping its content to generate responses without permission. The newspaper claimed that Perplexity was pulling data directly from its articles and then using it to craft answers for users.
Perplexity has, however denied the claims stating that its platform does not violate intellectual property. The company avers that it only makes use of public data, and all ethical practices govern the use of content on the platform. The complexities involved in the operating issues in the fast-evolving field of AI-powered search and content generation are brought into the limelight through legal and reputational challenges.
Revenue Sharing Model for Publishers
In response to calls from media houses, Perplexity has taken steps to move towards addressing the problem in launching a revenue-sharing model targeting the compensation of publishers to utilize their content in developing answers through AI. So far, the model went live in July and provided an opportunity for publishers to share a percentage of adverts earned when their articles were reflected in Perplexity answers. According to the company, the deal ensures there is fair recompense for the creators of the content on the intellectual property used.
In recent years, Perplexity’s drive has attracted major publishers. Such companies include Fortune, Time, Entrepreneur, The Texas Tribune, Der Spiegel, and WordPress, among others, that have pledged themselves to the “Publishers Program” of the site. Under this scheme, the revenue is split with the publishers based on the frequency of their content being referred to in the responses. “The more an article is cited in a single response, the higher the share of revenue that goes to the publisher,” Dmitry Shevelenko, Chief Business Officer of Perplexity, told me in an interview in July. Shevelenko said she hopes to bring on 30 publishers by the end of 2023.
Growth and Market Penetration
Perplexity growth curve is very impressive indeed. By August, it reported that the app it had developed had been downloaded more than 2 million times, and the company had started processing more than 230 million queries per month. The volume of queries being received from the United States had also grown eight-fold over the last year, giving a clear indication of tremendous demand for the AI powered search tools by the said company.
Next in line for the company will be to scale up its operation, develop its product, and expand its user base. Institutional Venture Partners and other investors funding Perplexity puts it in an enviable position to grow ahead since it will have competition at higher levels from well-entrenched players in AI search.
The more heated the market for AI search technologies gets, the more likely Perplexity will differentiate itself with innovative features and a publisher-friendly revenue model to capture a piece of the rapidly evolving market. At the same time, how the company will navigate the legal and ethical challenges surrounding content scraping and copyright issues may well determine its future course.
source:WSJ
