Since the arrival of ChatGPT in late 2022, there has been an AI boom. The whole market has become an oligopoly with a few players such as Google, OpenAI, Meta and Amazon.com. In fact, the real competition is between Google and OpenAI, while Meta and Amazon are marginal players.
Many startups have been swallowed up by the tech giants — Inflection AI by Microsoft, Adept by Amazon and Character AI by Google.
Google and OpenAI’s duopoly have been challenged by Perplexity AI – an answer engine with 15 million regular users. Over the previous year 2024, its valuation at the beginning of 2025 rose to $9 billion. It is headed by Arvind Srivastav who has entrenched himself deeply into Silicon Valley’s ecosystem.
Google’s monopoly of search engine and advertising is formidable. Almost 90 per cent of searches online are conducted on Google. Microsoft’s Bing with a 4 per cent share has hardly dented Google’s monopoly. Yahoo’s usage too has declined. Neeva, a startup of a former Google employee has closed down in 2020 after trying hard to dent Google’s share.
Perplexity has, however, survived and has raised funds. Its answers are clean and comprehensive. Google carried the ad clutter. Perplexity is making money through its $20 a month subscription model. Its annual revenue is $30 million. Perplexity is also entering Google’s lucrative business of advertising. Google’s 80 per cent searches are non-monetizable. Many of these searches do not directly generate ad revenue. These are maintained to command leadership. Perplexity’s informational queries will lead to purchase decision.
Perplexity’s Srinivas is a diplomatic head with a string of Silicon Valley relationships. His company was visited by Elon Musk. He has got a lean team of 147 employees. His investors are well-chosen — Amazon founder Jeff Bezos, AI scientist Yann LeCun and AI investor Nat FriedMan.
Srinivas has withstood the cut-throat competition of Silicon Valley as he has got a good grasp of Silicon Valley’s political economy. He has interned with Google when Google Brain was putting together the transformer architecture. He understands the technical foundations of the present day AI and the complex web of industry’s relationships. He maintains cordial relations with rivals and diffuses tensions with the publishers. He knows how to navigate the landscape of AI.
Google’s search business stands firm, but it now faces a credible outsider who knows how people find information online.
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