Snap terminates $400 million AI search partnership with Perplexity

Snap Inc. has disclosed in its latest earnings report that it has amicably terminated its partnership with Perplexity, effectively cancelling a planned agreement valued at $400 million. The deal, which was designed to integrate Perplexity's AI search engine directly into the Snapchat application, was never fully realised by the public.

Although the collaboration was initially announced in November 2025 with revenue expected to commence in early 2026, the feature began testing earlier this year without reaching full deployment. Snap noted that while the technology was being evaluated within the app, the two companies ultimately could not mutually agree on a path to a broader rollout, leading to the decision to end the relationship.

The termination marks a significant shift in the strategic direction of the social media giant's artificial intelligence initiatives. Prior to the final cancellation, the partnership had been described as shaky for some time, with internal discussions failing to produce a consensus on how to integrate the AI search capabilities into the user experience.

Perplexity has not yet provided a comment regarding the termination of the deal. While the specific financial implications of the cancellation for both parties remain unquantified, the move highlights the challenges tech firms face in executing complex AI integrations before revenue milestones are met.

The news serves as a reminder of the volatility in the artificial intelligence sector, where high-value partnerships can dissolve before they generate any income. Investors and analysts will now be watching to see how Snap adjusts its strategy to capitalise on AI search without this specific partner.