According to TechCrunch, Snap has signed a deal to integrate Perplexity’s AI search engine directly within Snapchat, with Perplexity paying Snap $400 million in cash and equity for the privilege. The arrangement gives Perplexity exposure to more than 940 million Snapchat users who will get answers from its AI when querying the My AI chatbot. The new feature integrates into Snapchat’s interface early next year, with Snap starting to record revenue from this deal from 2026. The announcement came alongside Snap’s Q3 2025 results showing $1.51 billion in revenue, up 10% year-over-year, with losses narrowing to $104 million. Snapchat+ now has over 17 million subscribers, showing the platform’s subscription momentum continues.
Who’s really winning here?
This feels like one of those deals where both sides are spinning it as a win, but you’ve got to wonder who’s getting the better end. Snap gets a massive cash injection – $400 million is serious money even for them. But Perplexity? They’re buying distribution at an absolutely insane price.
Think about it – they’re paying upfront for access to nearly a billion users. That’s basically betting the company on this integration working. If Snapchat users don’t engage with the AI search feature, that’s a catastrophic waste of resources. And honestly, how many teenagers are really using Snapchat for serious research? The platform’s known for disappearing messages and filters, not academic queries.
The AI distribution wars are heating up
Here’s the thing – this deal signals that we’re entering a new phase in the AI wars. It’s not just about who has the best model anymore. Now it’s about who can secure the biggest distribution channels. Perplexity basically looked at the landscape and decided they couldn’t compete with Google and OpenAI on user acquisition alone.
So they’re buying their way into one of the biggest social platforms. Smart? Maybe. Risky? Absolutely. But this could become a trend – AI startups paying established platforms for access to their user bases. We might see more of these “distribution deals” where the AI company pays rather than gets paid.
That revenue timing is suspicious
Now, the fact that Snap won’t start recording this revenue until 2026 is… interesting. That’s more than a year from now. Basically, they get the cash but don’t have to show it on the books immediately. That timing feels convenient, doesn’t it?
It gives them flexibility in how they report this windfall. And let’s be real – $400 million is a huge amount for a company that just reported narrowing losses to $104 million. This deal alone could significantly impact their financial picture when it finally hits the books.
Meanwhile, Snapchat+ hitting 17 million subscribers is actually the more impressive number to me. That’s real, recurring revenue from users who actually want the product. The Perplexity deal feels more like a one-time strategic play rather than sustainable growth.
Where does this leave everyone else?
So what does this mean for the other players? Google must be watching this closely. Having a competent AI search competitor embedded in one of the most popular apps among younger users? That’s a direct threat to their search dominance over time.
And for other social platforms? They’re probably looking at this deal and thinking “Hey, we’ve got users too – maybe we should be getting paid for AI integration.” This could create a whole new revenue stream for social media companies struggling with advertising volatility.
Basically, we’re seeing the beginning of AI companies realizing they need to be where the users already are. Building your own platform is hard. Piggybacking on existing ones? That might be the smarter play, even if it costs you $400 million.
