The Competition in AI Search Intensifies with Perplexity's Recent Takeover
Fast-growing AI search company Perplexity has taken a significant step forward by acquiring Carbon, a Seattle-based tech startup that specializes in retrieval-augmented generation technology. This acquisition, announced in December 2024, marks an important milestone in Perplexity's expansion of its enterprise search and data connectivity capacities.
Company Background and Founding
Carbon was established in 2022 by Derek Tu and Aditya Chempakasseril, two tech innovators with remarkable resumes. Derek Tu, former tech leader at Italic and having held product roles at companies like Wayfair and 6sense, brought a wealth of product experience to the startup. His counterpart, Aditya Chempakasseril, an engineer from Italic with a master's in computational science, contributed technical expertise to Tu's strategic vision.
Originally springing from brainstorm sessions on a collaborative whiteboard at a WeWork location, Carbon quickly grew into a leading solution for connecting external data sources to large language models. In 2023, Carbon secured a $1.3 million seed investment, with backing from Treble, MKT1, and several angel investors. This funding confirmed the potential of Carbon's groundbreaking approach to data integration.
Technological Innovation and Strategic Rationale
Carbon's core competence lies in RAG (retrieval-augmented generation), an advanced technique enabling large language models to access and incorporate information from external data sources. This enables AI systems to extract data from various platforms such as Google Drive, SharePoint, Notion, Slack, and other enterprise applications.
Perplexity's acquisition of Carbon signals a clear intention to strengthen its answer engine's capabilities. According to Aravind Srinivasan, Perplexity's CEO, this move will make AI "more personal to you—at home, work, or on the go." Integrating Carbon's technology will empower Perplexity's platform to draw information from internal databases, cloud storage, and document repositories, resulting in a more comprehensive and tailored search experience.
Fueling Enterprise Search Ambitions
The acquisition of Carbon positions Perplexity as a serious contender in the evolving enterprise search market. By onboarding Carbon's four-person team, the company aims to develop advanced features allowing users to search through personal and professional files, work messages, and unstructured organizational data.
Perplexity intends to launch these upgraded search capabilities in early 2025, potentially revolutionizing how professionals interact with their digital information. The technology will enable seamless searching across multiple platforms, diverging from the traditional approach to information retrieval.
Market Context and Competition
The competitive landscape for enterprise search is escalating, with prominent players like OpenAI, Google, and Microsoft developing comparable technologies. Perplexity's acquisition of Carbon is a strategic move to distinguish itself in this increasingly congested market.
This acquisition occurs at a time of notable expansion for Perplexity. The company recently secured a $500 million funding round, boosting its valuation to $9 billion—an impressive surge from $520 million at the start of the year. This investment from Institutional Venture Partners underscores the market's confidence in Perplexity's trailblazing approach to AI-powered search.
Broader Implications for AI Search
The Carbon acquisition indicates a broader trend in AI: the growing significance of contextual and personalized search experiences. Perplexity's pursuit of advanced generative AI technologies, such as RAG, will allow AI systems to access and incorporate information from multiple sources, improving the nuanced and comprehensive nature of searches.
This approach will enable users to perform more sophisticated searches, drawing on web-based information and personal and organizational data repositories. This evolution represents a significant advancement in making AI search tools more intelligent, context-aware, and ultimately more advantageous for individual and enterprise users.
Future Outlook
As Perplexity expands its capabilities, the Carbon acquisition signifies more than just technological progress—it represents strategic positioning for the future of AI-driven information retrieval. The company is directly signaling its ambition to transcend traditional search engines and create a more intelligent, interconnected search experience.
The technology promises to dissolve barriers between different data sources, allowing users to access information more efficiently and comprehensively. Integrating Carbon’s RAG technology has the potential to fundamentally alter how we interact with digital information, whether for personal productivity, professional research, or enterprising data management.
With this acquisition, Perplexity isn't just enhancing its search capabilities but reimagining the entire concept of information access in the AI era. The upcoming months will be crucial in demonstrating how effectively Perplexity leverages Carbon’s technology to create a truly groundbreaking search platform.
Perplexity's acquisition of Carbon could potentially lead to collaborations with other AI search companies, such as integrating Carbon's retrieval-augmented generation technology with OpenAI's models for more advanced enterprise search solutions. This could position Perplexity as a comprehensive AI search provider, appealing to both individual and enterprise users.
Additionally, Perplexity, following in the footsteps of industry giants like Google and Microsoft, could explore the use of Carbon's technology in enterprise search applications, aiming to reduce the reliance on traditional search methods and promote more contextually relevant results when users search using their platform.
