AI startup Perplexity has stepped back from advertising amid concerns that sponsored content could undermine user trust, even as rival firms press ahead with ads in a bid to turn the eye-watering investment into genAI to something monetisable.

The San Francisco-based company was among the first AI developers to trial advertising in 2024, testing sponsored answers that appeared beneath chatbot responses. However, Perplexity – which also operates a paid subscription model – began winding down those ads late last year, and, as first reported by Business Insider, executives confirmed on Tuesday at a roundtable with reporters that it has no plans to pursue advertising further.

“A user needs to believe this is the best possible answer, to keep using the product and be willing to pay for it,” a Perplexity executive said, according to Business Insider.

While Perplexity said its ads were clearly labelled and had no influence on chatbot responses, the executive added that “the challenge with ads is that a user would just start doubting everything . . . which is why we don’t see it as a fruitful thing to focus on right now”.

The move comes as leading AI groups experiment with advertising to generate revenue from free users and reassure investors, as companies continue to burn through cash training and maintaining large language models.

OpenAI last week began testing ads for non-paying users, emphasising that sponsored placements do not affect answers and are displayed separately from responses. Google has introduced advertising in AI Mode and AI Overviews within search, although it has so far avoided placing ads inside its Gemini chatbot.

In contrast, Anthropic has committed to keeping its Claude chatbot free from advertising.

Perplexity was also an early mover in adding shopping features to its platform, later followed by Google and OpenAI. Unlike its competitors, however, executives said Perplexity does not take a cut of sales or generate revenue from this functionality.

Valued at $18bn, with reported annualised revenues of $200mn, Perplexity derives most of its income from subscriptions. It offers free access alongside paid tiers ranging from $20 to $200 per month and claims more than 100mn users.

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With advertising now wound down, the company says it is prioritising answer quality.

At the roundtable earlier this week, a Perplexity executive said that “we are in the accuracy business, and the business is giving the truth, the right answers.” Although advertising could be revisited in future, the executive added it was “misaligned with what the users want” and that the company might “never ever need to do ads”.

Instead, Perplexity is ramping up its enterprise strategy, targeting large organisations and high-powered users including finance professionals, CEOs and doctors. The company currently has just five people on its enterprise sales team but plans to expand aggressively, positioning itself more directly against rivals such as Glean, which helps employees search internal company data using AI.

Executives also said Perplexity will prioritise revenue and retention over metrics such as the number of questions answered. While declining to share detailed financials, the company revealed its revenue grew 4.7 times last year, reaching $200m in annual recurring revenue by October 2025. It also pledged to maintain a free tier, albeit with rate limits.

The company also launched an enterprise product last year that draws on internal and external data to generate research reports, among other features, as it seeks to establish a stronger foothold in the business market.