Perplexity AI Eyes India for Growth Against OpenAI

Perplexity's Strategic Expansion into the Indian Market

While OpenAI maintains a strong position in the United States, Perplexity is pursuing an alternative strategy – a focused expansion into India to compete in the evolving landscape of AI adoption. The AI-powered search startup is experiencing rapid user growth within the world’s second-largest internet and smartphone market, positioning itself for significant scalability.

Exclusive Partnership with Bharti Airtel

This week marked a key development as Perplexity collaborated with Bharti Airtel, India’s second-largest telecom provider. This partnership will provide a complimentary 12-month subscription to Perplexity Pro – typically valued at $200 – to Airtel’s entire subscriber base of 360 million users. Airtel has confirmed to TechCrunch that this agreement is exclusive, preventing other Indian telecommunications companies from offering Perplexity’s services, including complimentary access, to their customers.

Global Expansion and the Importance of Volume

The Airtel collaboration represents one of Perplexity’s most substantial initiatives within a broader global expansion plan. This plan includes partnerships with over 25 telecom operators worldwide, including recently established agreements with SoftBank in Japan and SK Telecom in South Korea. The sheer size of the Indian market, the world’s most populous nation, offers a mass audience that the San Francisco-based startup is unlikely to find elsewhere.

Significant Growth in User Acquisition

Perplexity is already demonstrating considerable momentum within India. Data from Sensor Tower, shared exclusively with TechCrunch, reveals a 600% year-over-year surge in Perplexity’s downloads during Q2, reaching 2.8 million. In contrast, OpenAI’s ChatGPT experienced a 587% increase, totaling 46.7 million downloads over the same period.

Active User Growth Trends

This growth extended to active users as well. Perplexity’s monthly active users (MAUs) in India increased by 640% year-over-year in Q2, while ChatGPT’s MAUs grew by 350%. Sensor Tower data indicates that India was Perplexity’s largest market based on MAUs in the last quarter. However, ChatGPT continues to lead in absolute numbers, boasting 19.8 million MAUs compared to Perplexity’s 3.7 million.

Leveraging the Indian User Base

Building upon previous partnerships, Perplexity is actively working to utilize India’s extensive user base to gain an advantage in Western markets, where OpenAI currently dominates paid subscriptions. Earlier this year, Perplexity partnered with Paytm, a leading Indian fintech company, to integrate its AI-powered search into the Paytm app, which has over 500 million downloads and is a top-three app on India’s Unified Payments Interface network, processing over ₹1,34,000 crores (approximately $15.6 billion) in transactions.

Direct Investment and Expansion Efforts

Perplexity CEO Aravind Srinivas has also personally spearheaded expansion efforts in India. In January, he announced plans to recruit an Indian executive to be based in the country, a plan temporarily paused due to an “overwhelming” response. He subsequently announced a $1 million investment and a commitment to dedicate five hours weekly to a team focused on AI development within India.

Exploring Opportunities within Education

Sources have revealed that the startup has internally discussed offering its AI search engine to Indian students as a means of expanding its reach.

A Relatively Uncrowded Market

Perplexity’s view of India as a key growth market is partly due to the limited number of domestic AI startups, particularly in the AI search sector. Simultaneously, the country possesses a large and engaged base of technologically proficient users, prompting even Perplexity’s competitor, Google, to launch AI-powered search features like AI Mode and AI Overviews in India before many other regions.

Challenges in Monetization

Successfully monetizing this large user base presents a challenge. Perplexity currently lags significantly behind ChatGPT globally in terms of revenue, despite both offering a starting price of $20 per month. In Q2, ChatGPT’s in-app purchase revenue worldwide increased by 731% year-over-year to $773 million, while Perplexity experienced a 300% increase, reaching $8 million, according to Sensor Tower.

Potential for Growth in India

The monetization challenge is particularly pronounced in India, where consumers are known for being price-sensitive. However, there are encouraging indicators. ChatGPT saw an 800% year-over-year increase in in-app purchases in India during Q2, reaching $9 million. While Perplexity has not yet generated substantial in-app revenue from India, the startup has the potential to grow its paid subscriber base through initiatives like the Airtel partnership.

Attracting Investment and Demonstrating Revenue Potential

Strategic partnerships in markets like India could attract investors who prioritize user growth and geographic diversification. However, to secure long-term investment, Perplexity must demonstrate its ability to convert its expanding user base into revenue.

Requests for comment from Srinivas were not answered.