Snap, the parent company of the Snapchat app, said on Thursday that it has signed a deal with Perplexity AI to integrate its AI “answer engine” into the social media app starting in early 2026. Under the agreement, the AI company will pay Snap $400 million over a year in a mix of cash and equity, an amount that represents about 7 per cent of the social media company’s 2024 sales.
The partnership represents “a first step in Snap’s effort to make Snapchat a platform where leading AI companies can connect with its global community in creative and trusted ways,” the two companies said in their announcement.
Wall Street reacted positively to the announcement, as Snap’s shares climbed 25 per cent after the company released its third-quarter earnings.
Perplexity will pay 0 million to put its AI “answer engine” inside Snapchat starting in early 2026.
Snap notes that users will still be able to engage with the company’s My AI chatbot, the integrated Perplexity AI service will provide them with “real-time answers from credible sources and explore new topics within the app,” the companies said.
The integration of Perplexity AI into Snapchat is a win for both companies. Not only does Perplexity gain new users, but Snap also benefits from additional subscribers and higher engagement, encouraging users to spend more time in the app.
Snapchat has been one of the most popular social media apps, amassing nearly 1 billion monthly active users. However, the Santa Monica, California–based company has faced headwinds due to slowing growth in its advertising platform amid an increasingly competitive digital advertising market, particularly against Meta.
For Perplexity AI, the San Francisco–based company founded by Aravind Srinivas, the integration into Snapchat highlights the growing acceptance of its AI-powered search engine, which provides direct, sourced answers to user queries. Perplexity AI competes with OpenAI’s ChatGPT and Google’s artificial intelligence–powered products. The company has gained traction among Silicon Valley’s bigwigs, analysts, journalists through word of mouth.
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Perplexity AI has been aggressive in adding new features and announcing a series of partnerships that have driven a massive surge in its valuation, which now stands at around $20 billion.
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