AI Search Engine Spells Trouble for Google

24/7 Wall St. Insights

• The Perplexity AI search engine is still tiny in comparison to Google.
• However, the start-up is raising money and its search engine is gaining users.
• Also: Discover the next Nvidia.

Few people knew about or used the Perplexity AI search engine when it was first launched. Known as “ask,” it became available in August 2022. There was no way that people who followed the search industry believed that it could compete with Google, which has a market share of about 85% in the United States. That trend is starting to change as Perplexity raises more money and the search engine gains users.

According to the Financial Times, “Perplexity AI, an artificial intelligence search start-up, has increased its monthly revenues and usage seven-fold since the start of the year, after closing a new $250mn round of funding.” Dmitry Shevelenko, Perplexity’s chief business officer, told the business newspaper that the number of searches completed by people so far this year has hit 250 million, compared to 500 million in all of 2023.

Perplexity is still tiny compared to Google, but it has two potential advantages. One is that more and more people are drawn to its AI-powered answer. The other is that Google is under fire from the U.S. Department of Justice for antitrust violations. A federal court recently said, “Google is a monopolist, and it has acted as one to maintain its monopoly.” Among other parts of the case, Google parent Alphabet Inc. (NASDAQ: GOOGL | GOOGL Price Prediction) paid Apple to be the default search engine on its Safari browser.

Ultimately, it is not lawsuits that draw people to online applications. It is rather whether those applications work well for consumers. Even though Perplexity has raised hundreds of millions of dollars, traffic to its search product will determine its success.

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