As the nature of the internet evolves from something we explore with our thumbs and mouse clicks to something we talk to, and which talks back, a fierce fight for the future of search is under way.

At the Google I/O conference last week the incumbent web giant announced 100 different AI innovations to demonstrate how ready it and its Gemini chatbot are for the future. But 60 kilometres down the road from the conference, a much smaller company is working to beat Google in the race to dominating the AI search market.

Dmitry Shevelenko, chief business officer at the self-styled AI-powered answer engine Perplexity, said Google was too big to pivot away from traditional search, and it’s too bogged down in advertising.

“They built the world’s most lucrative business, but it’s predicated on getting you to click on certain links. And that behaviour of link clicking, especially on commercial queries, it’s just going to become less relevant in the future of the internet,” he said.

“So aligning with your users, as opposed to with advertisers, that business model challenge is where Google is really going to operate with two hands tied behind its back.”

Perplexity’s main product is an answer machine that navigates the web to find responses to your queries. The company was founded in 2022 by four academics who had computer science experience at OpenAI and Google, and it has received funding from investors, including Nvidia and Amazon founder Jeff Bezos.

Australia is a priority market for Perplexity, which plans to grow its local user base by partnering with major Australian businesses. It has finalised a deal for the first of these partnerships, to be announced in the coming month.

Shevelenko said the company had followed a similar strategy in Japan, Korea, Germany and other countries, where overall traffic had increased by as much as 10 times following the initial partnership.

“And if there are things we need to do to make the product work better in Australia, if there’s certain parts of our web index that are under-covered, we’ll be very nimble and quick to adapt and react there,” he said.

“But the behaviour that we see from our Australian users until now is they actually have some of the highest retention and usage.”

Australians make 10.7 million queries a month on Perplexity, according to the company.

Shevelenko characterises Perplexity as forging a healthier internet than the one dominated by Google, but also charting a different path compared with the likes of OpenAI and Meta. He said Perplexity focused on high-quality citations for the same reason peer-reviewed journals do; because otherwise follow-up queries and conclusions could be based on bad information.

“The biggest problem we’re going to have with AI is, what’s the AI that we can trust, and what’s the AI that is either hallucinating or trying to manipulate us?” he said.

“OpenAI keeps talking about AGI [artificial general intelligence], and computers are going to take over the world, and you know, the ‘glorious revolution’ is just around the corner. We tend to focus on practical applications of AI. How do we help answer your questions? How do we scratch the itches you have in your daily life?”

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Perplexity doesn’t train its own foundation models, meaning its products work with generative AI from other companies including Anthropic, OpenAI, DeepSeek, Meta and more. Perplexity takes these open-source models and trains them further, connecting them to its central search infrastructure.

Shevelenko said that “being Switzerland” in this way would be a long-term advantage, as Perplexity would dynamically access different tools for different queries, even if it meant it didn’t have the hype cycle of constantly announcing new models.

“What we see in the data is the people that use Perplexity, they have much higher retention than the folks using ChatGPT because they’re coming for a long-term purpose. With ChatGPT, there was this craze of creating Studio Ghibli-style images; my daughters were doing it for two weeks non-stop, and then they forgot all about it,” he said.

“It’s different patterns of usage. But we feel that the folks who are over-hyping AI, in a certain time period, they’re actually going to turn off practical-minded people.”

Currently, most users access the product through the mobile app, and the majority also use the desktop website. Perplexity has built popular bots for WhatsApp and Telegram too. But Shevelenko said the next step for the company was launching its own web browser. Called Comet, the browser will give users constant access to Perplexity as they explore the internet.

“With the nature of how ingrained tech monopolies are in our daily tech lives, to have a shot we need to be ubiquitous. Because everybody is going to try to force their AI down users’ throats,” he said. He noted that Perplexity had been founded at the perfect time, in 2022, as AI models had just become smart enough to summarise web content. Now, he said, was the perfect time for an AI web browser.

“The reasoning models have just gotten good enough where they can autonomously navigate websites that you’re logged into, and extract information from them. Reason against the website,” he said.

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“That’s a different level of interfacing with the web. The capability just came online. And so that’s why we’re going to push hard with the browser the rest of the year.”

Perplexity’s certainly not alone in that space, with Google announcing plans to reshape its dominant Chrome browser with agentic AI, Norway’s Opera promising a browser that can navigate the web for you and even code custom apps, and OpenAI rumoured to be developing a browser using its own web-surfing agent, Operator.

While the internet won’t change overnight, the entire industry is preparing for a future where users simply ask the internet – to order new shoes, or to shortlist brownie recipes, or how to beat the boss on level three, or what’s happening in the World Cup, to check with Paul that he’s OK with a Thursday deadline – and the internet will just do it.

Tim O’Neill, co-founder of AI consultancy Time Under Tension, said the shift in focus was the ideal time for new companies to get users on their side.

“I doubt that Perplexity could ever dethrone Google, but yes, they could take a bite out of their market share. With generative AI being such a transformational change in how people use the internet, there has never been a better time to challenge the incumbents,” he said, noting that some people have already transitioned to using AI search as a primary option.

“You can see this behaviour already happening within ChatGPT, and Google is taking notice. From a slow start, they are now sprinting into generative AI tools, apps and features.”

Technology research and advisory firm Gartner has predicted that traditional search engine volume will drop by 25 per cent in 2026 due to AI search. O’Neill said that sounded high. But there are trillions of Google searches each year. Even a 10 per cent drop would be huge.

Google is one of the biggest companies in the world, and once it rolls out its own AI, Search, to catch those users switching away from the web, which it has already begun to do, isn’t that the end for Perplexity?

“If you went back 18 months ago, everything that you would have thought Google could do to kill Perplexity, they’ve pretty much done it. They turned on AI overviews, they made Gemini default on all their mobile devices. They’re using their monopoly power in full,” Shevelenko said.

“Yet somehow, our daily query volume in that same period went from 4 million queries a day to 30 million queries a day. This is the only thing we do, and people feel and sense the difference.”

According to Shevelenko, the idea of search engine optimisation, or SEO, would be one of the first tenets of the current web to be challenged and toppled in the next few years.

SEO is used by publishers and content creators to make sure their web pages are ranked highly in Google. But Shevelenko said SEO was a “devil’s bargain” Google had made, which resulted in worse search results but more money for the web giant, and placed the entire ecosystem under duress.

“SEO is misaligned with users, it’s basically trying to hijack a user’s attention. And I don’t think it’s necessarily a bad thing that SEO is going to play a smaller role in how we get information and knowledge,” he said.

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“One of the things we rolled out anticipating this is a revenue sharing structure with publishers, whereas we monetise in different ways – we share in that upside with publishers directly. I think it’s going to take a number of different approaches, and I think we’re actually better positioned for that. Because we don’t have legacy business models, we don’t have legacy revenue to defend.”

Such a shift has massive ramifications. Much of the information on the internet is put there by people expecting to be compensated in some way when it’s accessed, either through advertising or subscriptions or rankings. How will the new breed of AI content-servers do a better job of impartially selecting the best information, and paying for it?

Shevelenko said consumers had changed, and now recognised that having a free product at the centre of their information-gathering meant they were other being commodified, or being fleeced. Most of Perplexity’s current revenue comes from consumer subscriptions. The base product is free, but the paid one is more flexible and powerful.

“One of the most exciting shifts happening with Perplexity, and also with ChatGPT, is that consumers are willing to pay for something that makes them smarter. People pay for media, but for a consumer productivity tool? That’s new behaviour,” he said.

“So in many ways our livelihood is on the line if we let our own system get hijacked. We have every incentive to be on the lookout. Aligning with users and having revenue share with publishers is going to be a robust model. It’s going to take time to scale, but that feels like a healthier foundation for a future internet.”

And of course, advertising would need to evolve too. Perplexity has not ruled out having paid content served up by its product, but Shevelenko said the whole system needed to be rethought.

“The internet will be a lot more voice to voice [in the future], and so you’re just going to have less opportunity to have visual ads. And believe me, if you think display ads are annoying, voice ads probably will be the most annoying form factor,” he said.

“So we just need to create these new models that are not about distracting users. It’s about creating valuable offers and discounts, and having those be personalised.”

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