Snap Ends $400 Million Perplexity Deal, Halts AI Chat Integration
Key Points
- Snap and Perplexity AI mutually terminated a $400 million cash‑and‑equity partnership in Q1 2026.
- The deal would have integrated Perplexity’s answering engine into Snapchat’s Chat, but will now contribute no revenue.
- Snap’s sales guidance was revised to exclude any earnings from the Perplexity integration.
- Concerns over AI search in private messaging and lack of a broader rollout plan emerged as early as February.
- Snap continues to explore AI through AI Sponsored Snaps, allowing brands to embed chatbots in ads.
- New Place Loyalty feature on Snap Map ranks users by visitation frequency, with private rankings.
- Daily active users rose 5 % YoY to 483 million; monthly active users increased 5 % to 965 million.
Snap disclosed in its Q1 2026 investor letter that it and Perplexity AI have mutually terminated a $400 million cash‑and‑equity partnership announced last November. The deal, which would have embedded Perplexity’s answering engine into Snapchat’s Chat, will no longer contribute to Snap’s 2026 revenue outlook. While the move pauses the planned AI chatbot rollout, Snap continues to push other AI‑driven features and reports a 5 % rise in daily active users.
Snap announced on Tuesday that it and Perplexity AI have amicably ended their partnership, a $400 million cash‑and‑equity deal first unveiled in November 2025. The agreement would have placed Perplexity’s AI answering engine directly into Snapchat’s Chat interface, letting users ask questions and receive source‑backed responses without leaving the app. Snap’s Q1 2026 investor letter now states the relationship ended in the first quarter, and the company’s sales guidance has been adjusted to exclude any revenue from the Perplexity integration.
The cancellation arrives as rivals double down on AI assistants across their platforms. Meta has rolled out Meta AI to WhatsApp, Instagram, Facebook and Messenger, while Google weaves Gemini into Search, Android and Gmail. Snap’s move to partner with Perplexity seemed a logical step for a service with hundreds of millions of daily users who already rely on the app for conversation, planning and content sharing. Yet signs of trouble surfaced as early as February, when Snap revealed that it had not reached a mutual agreement on a broader rollout plan with Perplexity.
Industry observers noted that embedding an AI search function inside private messaging raises privacy and safety concerns, especially for younger users. The potential for the chatbot to handle sensitive topics without appropriate safeguards added another layer of complexity to the deal. Those unresolved issues likely contributed to the decision to part ways.
Snap’s AI ambitions are not dead, however. The company recently launched AI Sponsored Snaps, an ad format that lets brands embed interactive chatbots within Chat. This suggests that Snap may still experiment with chatbot‑style interactions, but through a monetized channel rather than a native search feature. In addition, Snap is expanding its Snap Map experience with a new Place Loyalty program that ranks users based on how often they visit specific locations, assigning Gold, Silver or Bronze status. Rankings stay private and location sharing remains off by default.
Despite the setback, Snap reported solid growth in the first quarter. Global daily active users climbed 5 % year‑over‑year to 483 million, while monthly active users rose 5 % to 965 million. The company credited the uptick to recent updates across Snap Map, Lenses and other core features. With user numbers on an upward trajectory, Snap appears poised to continue investing in AI‑driven experiences, even if the Perplexity partnership is no longer part of the roadmap.