Snap says $400 million AI search deal with Perplexity was called off “amicably” – The Economic Times

Snap and AI startup Perplexity “amicably ended” their partnership, the social media company revealed on Wednesday in its quarterly earnings report, scrapping plans to integrate Perplexity’s AI-powered search engine into Snapchat, its messaging app.

The agreement, announced last November, would have seen Perplexity pay Snap $400 million in cash and equity over a one-year period.

Snap said its current sales guidance now “assumes no contribution from Perplexity.” Earlier, the company had expected the partnership to begin contributing to revenue from 2026 onwards.

The proposed integration aimed to bring Perplexity’s conversational AI search into Snapchat’s “Chat” interface, allowing users to ask questions and receive AI-generated answers directly within the app. The feature had entered testing with a small group of users, but Snap said in February that the two companies had “yet to mutually agree on a path to a broader rollout.”

The partnership was also expected to support Snap’s advertising business. The company has been pushing deeper into direct-response advertising products such as “App Purchase”. A search-led AI experience inside Snapchat could have created stronger monetisation opportunities by tapping into user intent and engagement.

Alongside the update on Perplexity, Snap reported stronger first-quarter results. Revenue rose 12%, supported by resilient advertising spending and growth in daily active users, especially in markets outside North…