Google's Most Serious Rival Isn't Microsoft—It's a Start-Up

Perplexity AI bears watching as it competes with Google's search and advertising business.

- Parmy Olson

The AI boom of the past two years has largely been a two-horse race. Alphabet's Google and Microsoft-funded OpenAI have duked it out for customers, while Amazon.com and Meta Platforms have nibbled at the margins for market share. All told, the boom has consolidated wealth and power among tech's six biggest companies, raising their market valuations by US$8 trillion (S$11 trillion) since ChatGPT's launch two years ago. But at least one new company has emerged as an outsider with a chance of challenging their oligopoly.

More than 15 million people, according to a spokesman, are regularly using Perplexity AI, an "answer engine" that competes with Google's search and advertising business. The website and app shot up in value over the course of 2024, from US$1 billion at the start of the year to US$9 billion in December when it closed a US$500 million funding round. Its founder, Mr Aravind Srinivas, is a consummate negotiator who has plugged himself deeply into Silicon Valley's network while diffusing tension with competitors and critics.

Going up against Google has always looked like a suicide mission. Around 90 per cent of online searches globally are conducted on its site. Microsoft's Bing, after incorporating ChatGPT two years ago, has barely made a dent in Google's market share, remaining at just 4 per cent. Yahoo's usage has dwindled. And remember Ask Jeeves? A promising AI start-up called Neeva, run by a former Google ad executive, closed down in 2023 after four years of trying to compete with Google.