Perplexity has officially abandoned advertising, stepping back from a revenue strategy it once pioneered in the AI industry. The decision marks a significant pivot for the San Francisco-based startup and exposes a fundamental divide among AI companies over how to balance profitability with user confidence.
The company phased out ads in late 2024 and confirmed this week that it has no plans to revisit advertising as a revenue stream. Executives told reporters on Monday that the core concern is user trust—when users rely on an AI chatbot for critical decisions, the presence of commercial influence can undermine the entire value proposition.
“A user needs to believe this is the best possible answer, to keep using the product and be willing to pay for it,” a Perplexity executive explained to the Financial Times.
The Trust Problem in AI Search
Perplexity was among the first AI services to experiment with advertising in 2024, displaying sponsored content beneath chatbot responses. However, the company discovered what many in the industry are now grappling with: users are fundamentally skeptical of ads embedded in AI-generated answers. Unlike traditional search engines where users understand they’re viewing ads alongside organic results, AI chatbots present a single authoritative voice. When that voice is potentially influenced by advertiser dollars, users lose confidence in the answer itself.
“One consistent issue with ads in AI-generated answers is that users won’t believe them,” an executive stated, highlighting why the company abandoned the strategy.
A Industry Divide Over Monetization
Perplexity’s decision puts it squarely in the camp with Anthropic, the maker of Claude, which has loudly rejected advertising altogether. Anthropic has argued that including ads would contradict its mission of creating a truly helpful AI assistant and would force users to wonder whether recommendations are genuine or subtly steered toward monetizable outcomes.
Meanwhile, competitors are moving in the opposite direction. OpenAI recently introduced ads to ChatGPT users with free accounts or low-cost subscriptions, claiming advertisements won’t influence the chatbot’s responses. Google has also incorporated advertising in its AI mode and AI Overviews, though it has not yet introduced ads into Gemini.
The split reveals the AI industry’s core tension: Can users trust an AI assistant with a commercial agenda?
Doubling Down on Subscriptions and Enterprise
Rather than pursue ads, Perplexity is focusing its monetization efforts elsewhere. The company is aggressively targeting high-powered professionals including finance experts, doctors, and CEOs through premium subscriptions and enterprise offerings.
The startup reached $200 million in annual recurring revenue by October 2025 and has expanded its enterprise products to allow businesses to generate research reports from internal and external data. Currently operating with a five-person enterprise sales team, the company plans to expand this division in the coming months.
Perplexity will emphasize revenue and revenue retention over other metrics like question volume, according to executives. The company will continue offering free access with rate limits to maintain its user base while converting high-value users to paid plans.
The Economics of AI at Scale
This strategic shift comes as AI companies face mounting pressure to justify enormous computational costs. Training and operating large language models requires substantial infrastructure investment with limited near-term profitability. Advertising emerged as an appealing revenue source—after all, Google built a trillion-dollar company on search ads.
But Perplexity’s departure from advertising suggests that the AI search market operates under different rules than traditional search. The stakes feel higher when asking an AI for medical, financial, or professional advice. Users are less forgiving of perceived bias, making ad-free positioning a potential competitive advantage.
The company’s strategy reflects confidence that enterprise clients and premium subscribers will bear the infrastructure costs that free users cannot.
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