Perplexity to pay Snap $400M to power search in Snapchat | TechCrunch
News Summary
Snap announced on Thursday that it has signed a deal to integrate Perplexity's AI search engine directly within Snapchat. As part of the agreement, Perplexity will pay Snap $400 million in cash and equity. The deal grants Perplexity exposure to over 940 million Snapchat users, who will receive answers from its AI engine when interacting with the company's My AI chatbot. The new feature is slated for integration into the app's interface early next year, with Snap anticipating revenue recognition from this deal commencing in 2026. The announcement coincided with Snap's Q3 2025 results, which reported revenue of $1.51 billion, a 10% increase year-over-year. The company also narrowed its loss to $104 million from $153 million in the prior year. Additionally, Snap disclosed that its subscription tier, Snapchat+, now boasts more than 17 million users.
Background
Snap Inc. is an American social media company best known for its mobile application Snapchat, which allows users to send ephemeral photos and videos. Snapchat commands a significant global user base and has been actively exploring new monetization avenues, including its premium subscription service Snapchat+ and enhancing user experiences through AI integration. Perplexity AI is an emerging artificial intelligence company focused on developing an AI-powered search engine designed to provide direct, concise answers rather than just links to search results. This collaboration marks Snap's latest move to leverage AI technology to bolster its platform's capabilities and seek strategic revenue growth points.
In-Depth AI Insights
What are the long-term strategic implications for Snap beyond the immediate revenue contribution? - Beyond the $400 million cash and equity injection, this deal offers significant strategic leverage for Snap. Firstly, it enhances Snapchat's user engagement and utility through the integration of cutting-edge AI search technology, which is crucial for maintaining a competitive edge in the increasingly saturated social media market. - Secondly, the partnership with Perplexity may signal Snap's proactive transformation of its platform into a more comprehensive information acquisition and interaction hub, moving beyond just entertainment and communication. This can broaden its potential advertising and commercial partnership models. - Finally, it diversifies Snap's revenue streams, reducing its over-reliance on traditional advertising models and providing greater resilience amid macroeconomic uncertainties. How does Perplexity AI leverage this partnership to build a competitive advantage in the global AI search market? - Perplexity AI gains direct access to Snapchat's massive user base of over 940 million, presenting a valuable opportunity to acquire users and training data in its competition against established giants like Google. Such widespread user exposure can significantly boost its brand recognition and market share. - This partnership serves as a strong validation of Perplexity's technological capabilities and business model, helping it attract further investment and future strategic alliances. By integrating deeply into a mainstream social platform, Perplexity aims to accelerate user adoption, thereby securing a foothold in the AI search landscape. - However, challenges lie in ensuring seamless integration of AI search results with Snapchat's user experience, effectively converting massive exposure into active users and profitability, while navigating complexities of data privacy and content moderation. What could be the impact of this collaboration on the AI industry landscape and its key players? - The Snap-Perplexity partnership highlights the potential of AI technology in non-traditional search contexts, suggesting that AI search capabilities may become a standard feature across various digital platforms, including social media, thereby democratizing AI services. - This could prompt other social media platforms to accelerate their AI strategies or seek similar partnerships, intensifying competition within the AI market, especially in AI search. Leading AI companies might be viewed as more attractive partners, accelerating industry consolidation or the formation of new ecosystem alliances. - For traditional search giants like Google, this increases external competitive pressure, compelling them to further innovate to maintain market dominance. Simultaneously, it offers a pathway for smaller AI startups to scale through partnerships with large platforms, challenging the existing market structure.