Confusion’s withdrawal from advertising signals after larger strategic shift

Confusion is dropping plans to place ads in its AI search product as the industry looks for sustainable business models that won’t damage user trust. The changes are part of a larger strategic shift for the company, which has long focused on disrupting Google Search’s business.

“Google is changing to be more like Perplexity than Perplexity is trying to take on Google,” he told a Perplexity executive at a press briefing Tuesday. Executives spoke to the press on condition of anonymity.

Instead of chasing mass adoption, Perplexity will lean into its subscription business, focusing on becoming the most accurate AI service for developers, enterprises and consumers willing to pay a monthly fee. The company also plans to make partnerships with device makers a bigger part of its business moving forward.

The move is a big change for the company, which was one of the first AI firms to start experimenting with advertising in 2024. CEO Aravind Srinivas said on to podcast that year he predicted that advertising would eventually be the company’s core monetization engine. “I think with advertising we can be really profitable,” he added.

Now executives say they’re changing course because ads could make people distrust Perplexity’s answers. Anthropic offered a similar one explanation for not placing ads in its chatbot, Claude, and mocking ChatGPT’s ads in a Super Bowl ad earlier this month.

But there may be other reasons why Perplexity doesn’t track ads.

Early investors in Perplexity once believed the startup could reach hundreds of millions or even billions of users, but the startup’s growth has fallen short of expectations, according to a source close to the company. When the startup raised its Series B funding in 2024, board member and investor Cack Wilhelm in a blog post that Perplexity “was able to bring the power of AI to billions.” Two years later, that goal still seems like a long way off.

Data from third-party analytics firm Similarweb indicates that Perplexity had just over 60 million monthly active users on its website and mobile app in January. That’s more than double the users Perplexity had last year, according to Similarweb. People also now access Perplexity via its AI-powered browser, Comet, which Similarweb doesn’t track.

A source close to Perplexity says the agent in its Comet browser reached 2.8 million weekly active users (who were also Perplexity subscribers) in December 2025, down from a peak of 7.8 million WAUs earlier in the year.

Excluding Comet, Perplexity’s user base on web and mobile is less than 10 percent of OpenAI’s ChatGPT and Google’s Gemini, which have 800 million weekly active users and 750 million monthly active users, respectively.

“One of the things that is starting to become clear to us is that Perplexity is not for everyone,” another Perplexity executive told the press.

Advertising has been a strong business for companies like Google and Meta because they have hundreds of millions of free users. Without that scale, advertising is likely to become a less attractive business model.

Perplexity says it earns hundreds of millions of dollars in revenue, primarily from consumer subscriptions, but it increasingly expects growth to come from enterprise sales.

The AI ​​search startup also appears to be making a more concerted bet to power other AI services in 2026, with plans to hold its first developer conference later this year. The company’s pitch is that Perplexity can be an orchestration layer on top of AI models from OpenAI, Google and Anthropic, directing user queries to the best model for a given question.

Perplexity said it has no plans to get rid of its free tier at this time, despite pulling back ads. One way the company hopes to continue offering products to free users is through partnerships, such as the one it has with Motorola, where Perplexity comes pre-installed on consumer devices. Executives hinted that more device maker partnerships could be on the horizon.