As artificial intelligence (AI) transforms the field of information technology, Perplexity, a relative newcomer with its AI-powered search engine, emerges as a challenger to giants like Google and Bing.

Jon Schweppe, policy director of the American Principles Project, believes AI might replace conventional search techniques by providing more relevant results based on user choices.  "We are in the nascent stages of the AI revolution and it's still not clear that these companies know how to monetize it," he remarked, as quoted by Fox News.

Founded just a year ago by former AI researchers from OpenAI and Meta, Perplexity has swiftly garnered attention and substantial investments, including a $74 million round led by Amazon founder Jeff Bezos. This influx of capital has propelled the company's valuation to an impressive $520 million.

More Accurate Search Results

The "Copilot" feature of Perplexity's user-friendly interface, which resembles Google's, offers a unique experience by engaging users with clarifying questions to speed up searches and deliver more accurate results.

According to a New York Times report, Perplexity allows users to search for specific sources, like academic papers and YouTube videos. It can be helpful for practical queries, such as adjusting a water heater setting or providing step-by-step instructions, compared to less useful Google results.

Despite its promising trajectory, Perplexity faces challenges and uncertainties. Christopher Alexander, Chief Analytics Officer of Pioneer Development Group, believes AI will reshape user interaction with search engines, making the process more human through natural language processing.

Moreover, Perplexity is proactive in monetizing its platform, introducing a subscription-based "Perplexity Pro" product offering enhanced features such as a more powerful AI model and file upload capabilities.

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Powered by OpenAI's GPT-3.5 and its proprietary AI model, Perplexity's Pro version offers model choices like GPT-4 and Anthropic's Claude. While AI search engines often face challenges like hallucinations, Perplexity showed mostly accurate responses during testing, occasionally erring on details like outdated sports information or summarizing a different research paper.

Challenges to Perplexity

As Perplexity gains traction, it faces formidable competition from established players and emerging AI trends. Aiden Buzzetti, President of the Bull Moose Project, predicts a rise in AI tools for information sorting.
Concerns regarding censorship and misinformation accompany the rise of AI-driven search engines. Chase Reid, CEO of Mutable, questions the technology's reliability in handling sensitive searches, emphasizing the need for broader adoption considerations.

There are also persisiting doubts about the profitability of AI-driven search models. Phil Siegel, founder of the Center for Advanced Preparedness and Threat Response Simulation, questions the sustainability of open-ended search business models and speculates on the viability of niche product charging models.

AP News reported in January that the San Francisco-based startup plans to utilize the new funds for hiring and product development, aiming to grow its team from 38 to 60. Despite its rapid growth, Perplexity, which generates a single-digit million in revenue annually, faces the formidable challenge of Google's 90% market share in online search.

Despite these challenges, Perplexity's innovative approach and strategic investments signal a promising future in the dynamic landscape of online search.

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