By Adam Levine

Start-up Perplexity AI is in the middle of raising another $500 million, according to a report in the Wall Street Journal.

AI products like Perplexity seemingly pose new risk to Google's search dominance. Shares of Alphabet fell hard last week on the worries. Indeed, a Perplexity investment round would be another indication that private investors see fertile ground in search where there once was desert.

Perplexity's new valuation, according to the report, would be at least $14 billion, up from $9 billion at its most recent round in December.

Perplexity was the first AI search engine that combined an index of the web with language models that could summarize and expound on multiple webpages. It has since been followed into search by OpenAI and Anthropic, which are valued at $300 billion and $62 billion, respectively.

In the penalty phase of U.S. v. Google, the landmark antitrust suit that revolves around Google's U.S. search monopoly, Google itself has made the argument that new search options from AI have already changed the competitive dynamic in search.

Apple agrees. "True competition in the market is not far away," the iPhone maker recently wrote in its "friend of the court" brief for the case.

To be sure, Google Search has always seen well-heeled competition from Microsoft Bing. But the new AI search engines change the playing field for the first time since Google Search launched nearly three decades ago. Google's advantage has always been its search index, but now the language model is just as important.

One of the proposed remedies from the Justice Department and the states that have joined as plaintiffs in U.S. v Google would force Google to share its search index with this new competition. Such a move, should it happen, would give the AI products an added boost.

Write to Adam Levine at adam.levine@barrons.com

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May 12, 2025 15:05 ET (19:05 GMT)

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