India Emerges as a Potential Game Changer in Race to Compete with OpenAI, Suggests Latest Report on Perplexity

In the global landscape of artificial intelligence, Perplexity is strategically positioning itself for growth in India, a move that represents a significant shift from its U.S.-centric competitors such as OpenAI. By partnering with Bharti Airtel, India’s second-largest telecom operator, Perplexity offers a free 12-month subscription to its Pro service to over 360 million subscribers, marking one of the startup’s most significant moves in its global expansion strategy.

Notably, this partnership is exclusive, making Perplexity’s services unavailable for other telecom providers within the country. The strategic alliance underscores India’s attractive mass market potential for Perplexity, a San Francisco-based AI startup that has gained traction in the country with over 2.8 million downloads in Q2 2023—a 600% increase year-over-year according to Sensor Tower data shared.

While OpenAI’s ChatGPT saw a comparable growth of 587%, India remained Perplexity’s largest market by monthly active users (MAUs) during the same period, surpassing other geographies. In Q2, Perplexity’s MAUs in India increased by 640% year-over-year, while ChatGPT’s MAUs grew by 350%.

Building on earlier partnerships, including one with the Indian fintech giant Paytm, Perplexity aims to leverage India’s user base to gain a competitive edge in regions where OpenAI dominates paid subscribers. To further its expansion in India, Perplexity has discussed offering its AI search engine to Indian students and has announced plans to invest $1 million and commit five hours of CEO Aravind Srinivas’ time per week to an AI group in the country.

India’s relatively limited number of local AI startups, coupled with a large base of tech-savvy users, makes it an appealing growth market for Perplexity. However, monetizing this user base remains a challenge, as Perplexity lags behind ChatGPT in terms of revenue worldwide despite offering similar pricing structures. In Q2 2023, ChatGPT’s in-app purchase revenue surged to $773 million globally, while Perplexity reached $8 million—a 300% increase year-over-year.

The revenue challenge is particularly pronounced in India due to the price-sensitive nature of consumers. Nonetheless, promising signs have emerged, with ChatGPT generating an 800% year-over-year increase in in-app purchases in India, reaching $9 million in Q2. Perplexity has yet to generate notable in-app revenue from India but is poised for expansion of its paid subscriber base through strategic partnerships and deals like the one with Airtel.

These strategic partnerships in markets like India could attract the attention of investors who value user growth and geographic diversification. However, to secure long-term backing, Perplexity will need to demonstrate its ability to convert its expanding user base into substantial revenue streams.