In a rare move for Silicon Valley, the $18 billion AI search startup Perplexity has officially walked away from advertising. The company is abandoning the sponsored placements it began testing in 2024, confirming it has no plans to bring them back.
This move underscores one of the biggest questions facing AI right now: should answers be funded by ads, or by users?
Why Perplexity is walking away from ad revenue
Perplexity’s core value proposition is a simple one: fast, sourced answers you can trust. Executives realized that introducing paid placements risks blurring the line between objective information and promotion.
Even with visible labels, company leaders believe ads could prompt users to second-guess the neutrality of the AI's responses. First reported by The Financial Times, one executive bluntly stated that the challenge with ads is that "a user would just start doubting everything."
The company is prioritizing its reputation as an objective "answer engine," noting that they are in the "accuracy business".
A completely different path than traditional search
For decades, search engines have relied heavily on scrolling past sponsored "blue links." AI search changes the dynamic. Because tools like Perplexity generate direct answers, users expect clear, unbiased results. If users suspect an answer is being steered toward a paying sponsor, the tool's credibility vanishes.
Rather than chasing ad dollars, Perplexity is now doubling down on alternative revenue streams including focusing heavily on its paid subscriptions, which range from $20 to $200 per month.
Perplexity is aggressively expanding its enterprise sales strategy to target high-powered professionals like CEOs, doctors, and finance experts.
Despite dropping ads, the startup's growth has been massive, reportedly reaching $200 million in annual recurring revenue by late 2025, according to the same Financial Times story.
Bottom line
Perplexity’s pivot highlights a growing philosophical divide across the AI industry. OpenAI recently began testing ads for free users in ChatGPT, while Google integrates ads into its AI Overviews in traditional search.
Perplexity is aligning itself with Anthropic (the maker of Claude), which has publicly committed to keeping its chatbot free of advertising.
With AI-generated answers increasingly used for everything from high-stakes financial research to medical inquiries, credibility is becoming the ultimate competitive advantage. By stepping away from ads, it's proof Perplexity is betting that strict neutrality will drive stronger long-term growth than short-term ad revenue.
Follow Tom's Guide on Google News and add us as a preferred source to get our up-to-date news, analysis, and reviews in your feeds.
