AI search wars: Can telco-backed Perplexity survive OpenAI challenge?

Having teased an AI search feature for ChatGPT in July, OpenAI has finally launched SearchGPT, a tool designed to provide live web results in response to user queries, complete with source links, which Perplexity has been doing for some time.

Operators face a critical question: Did they back the right horse in the AI search race?

Perplexity, an app created by a startup of the same name, uses large language models to answer conversational search queries.

The app itself operates on a freemium basis: a free version lets users search to their heart’s content using the startup’s base large language model.

A premium version, Perplexity Pro, enables users to change up the underlying search model, providing access to the Llama 3-based Sonar Large 32k, Anthropic’s Claude 3 Sonnet, and even OpenAI’s GPT-4o.

Perplexity’s premium users can also upload files to aid in their searches and can perform far more searches per day compared to the free version.

Operators have seized on the app, with Telefónica, SoftBank, and Deutsche Telekom all investing in the startup and then providing access to Perplexity Pro to mobile subscribers as an added bonus.

Telefónica was among the most recent operators to provide access to the app to mobile subscribers in Brazil, the UK and Spain, with the telco also launching a TV-focused version of the app for its Movistar Plus+ customers.

SK Telecom also recently partnered with Perplexity, providing customers with access to the app's premium features for a year.

Edward Tian, CEO of GPTZero told Capacity that since Perplexity got their service out before OpenAI and others, the startup “established themselves as the leader in the AI search app game.”

“Not only were they first, but generally telcos have high favorability of the product,” Tian said. “A lot of AI tools have been falling short of expectations, but Perplexity has largely met or even surpassed expectations.”

The search app hasn’t just caught the attention of telcos, with Nvidia, Amazon founder Jeff Bezos, and billionaire investor Stanley Druckenmille also backing the startup, which valued itself at $3 billion back in June.

SearchGPT officially entered the AI search ring at the end of October. Built directly into ChatGPT, the tool augments the chatbot by enabling users to search the web in-app, providing real-time responses to queries on news, sports scores, and more.

SearchGPT was first unveiled back in July and at the time, was billed as a “prototype” feature, with OpenAI limiting access to a small group of testors to fine-tune it ahead of a widespread launch.

ChatGPT’s AI search feature can be accessed via OpenAI’s subscription services, like Plus, Teams, and Enterprise, though free version users will have to wait a few months,

Before the launch for SearchGPT, OpenAI’s chatbot had a rudimentary search ferature powered by Bing, but it was limited to premium users and worked similarly to traditional searches.

SearchGPT, however, is designed to work similarly to how Perplexity does: Inputting conversational queries with responses including links to relevant sources.

OpenAI’s SearchGPT can also respond from platforms that have opted out from having their data scraped for its generative AI training, with the tool built to be separate from OpenAI’s training corpus.

Arvind Rongala, CEO of Edstellar, said that OpenAI's SearchGPT offers deeper, conversational AI with a wider query-handling capability, making it “strong but maybe complicated.”

“It's like having a highly informed assistant for in-depth help; nevertheless, a fast ‘how much data is left?’ question might be excessive given its powers,” Rongala said.

When comparing search engine features, the simple question of how are they different can be answered simply: not very much.

On the surface, both platforms generate web-searches for conversational user queries, are powered by large language models, provide direct links to relevant source materials like images and videos, and offer premium features locked away behind subscriptions.

Despite the similarities, both have to contend with one major issue: Google.

As Perplexity and OpenAI look to butt heads over AI-powered search, they’re both looking to usurp a market leader that has dominated the search space for decades.

“Despite all the press, both Perplexity and OpenAI are startups (although well-funded ones) and what they are showing is still far from being production-ready,” said Vaclav Vincalek, founder and CTO of Hiswai. “Both organisations are lacking the depth and breadth of Google when it comes to content. They don’t have the experience of handling vast amounts of information.”

Google is joining the AI search trend with its AI Overviews feature, which provides search results that include AI-generated text and links based on information found on the web.

The results, however, have been less than stellar, with Google having to rework its AI search feature after it created results like jumping off the Golden Gate Bridge was a suitable cure for depression and that a way to help cheese stick to pizza would be to add glue.

With Google tripping over itself, the likes of OpenAI and Perplexity have a chance to make a steal.

“OpenAI has had the opportunity to create SearchGPT for quite some time, but it seems as though it was waiting for other players to test the market and work out some bugs before making its move,” said Anthony Miyazaki, a professor of marketing at Florida International University.

“Perplexity has been well received, particularly in the academic community where sources are of paramount importance, but with the experiential knowledge of OpenAI’s engineering teams, SearchGPT is bound to dominate this part of the market, even as Google and Meta push their own search AI.”

While telecom giants have joined major technology players have backed Perplexity, are they missing a trick with SearchGPT?

“Perplexity's simplicity of use might be helpful for telecoms looking for quick, precise information transmission,” said Rongala. “SearchGPT may be a more flexible long-term partner, though, if future customer service needs move toward sophisticated, dialogue-based support — think of client problems that need guided troubleshooting or tailored solutions.”

Vincalek suggested that for telcos looking to pick an AI search solution to provide to customers, the choice “depends on their strategic goals.”

“Perplexity’s appeal is that it is optimised for concise, factual responses,” Vincalek said. “If someone is looking for quick answers and direct information retrieval, you’d probably bank on Perplexity. SearchGPT on the other hand, brings a more conversational depth, although it’s still quite ‘ChatGPT-esque’ in its responses. But this may be enough to enhance customer engagement by making interactions feel more personalised.

“If telcos are looking to prioritise a straightforward, fact-driven search experience, they may feel confident going with Perplexity. If they’re aiming to give users a more interactive and adaptable AI experience, maybe SearchGPT could be the stronger option,” Vincalek added.

Despite the recent fanfare around SearchGPT Miyazaki told Capacity that Perplexity’s investors were right in backing the company because AI search will be a market that can have multiple winners, even if OpenAI comes in to snatch its crown.

“It’s a clear example that being the best is not always necessary for a product to succeed,” he added.

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