What the $400 million Snap-Perplexity deal means for users

Snap Inc and Perplexity inked a $400 million deal for an AI-powered search engine.

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Snapchat will soon include an AI search tool.
The company inked a $400 million deal with Perplexity to launch an AI-powered search engine in 2026.
Snap’s stock rose 17% following the announcement and earnings.

Snapchat users will soon be able to use the app as an AI search tool.

On Wednesday, the social media platform announced a deal to integrate Perplexity AI into Snap’s search engine. Perplexity is paying Snap $400 million in cash and equity over a year.

“Perplexity’s AI-powered answer engine will let Snapchatters ask questions and get clear, conversational answers drawn from verifiable sources, all within Snapchat,” Snap said in the Wednesday press release.

The companies plan to roll out the Perplexity search engine in early 2026, per the release.

A Perplexity spokesperson told Business Insider that user data from Snapchat would not be used for training its AI.

“Our goal is to make AI more personal, social, and fun — woven into the fabric of your friendships, Snaps, and conversations,” Snap’s CEO, Evan Spiegel, said in the release.

On Wednesday, Snap reported third-quarter revenue of $1.51 billion, a 10% increase compared to the same period last year. Its monthly active users increased 7% year-over-year to 943 million.

Snap’s stock price surged more than 17% in after-hours trading on Wednesday. Shares are down more than 35% this year.

The Perplexity-Snapchat tieup follows the lead of other social media platforms, such as Meta and X, that have integrated AI chatbots into their app interfaces.

In April 2024, Meta introduced the Meta AI chatbot on its applications, including Instagram, WhatsApp, and Facebook. The chatbot received mixed reviews from users, some of whom complained about it being activated unnecessarily and hindering the app experience.

In December, Elon Musk’s X launched the Grok chatbot on its app for all free users, which he called a “politically incorrect” alternative to other chatbots.

The Perplexity deal comes as Snap is seeing a change in how its users interact. Spiegel said on Wednesday’s earnings call that there has been an “engagement shift from things like friend stories to content posted on Spotlight.”

Spotlight is Snapchat’s public discover page, where users can view short, entertaining videos, similar to TikTok’s “For You Page,” or Instagram’s Reels.

The company plans to introduce features like games and conversation starters to reignite connections between users.

Read the original article on Business Insider

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