Perplexity inks $750m deal with Microsoft to use Azure cloud

Microsoft and Perplexity Ink Massive $750M Cloud Deal Amid Legal Turbulence and AI Search Battle

In a blockbuster move that signals the intensifying war for AI supremacy, Perplexity—the fast-rising AI-powered search engine startup—has signed a landmark three-year, $750 million deal with Microsoft to leverage its Azure cloud infrastructure. The partnership, first reported by Bloomberg, will enable Perplexity to deploy advanced AI models through Microsoft’s Foundry services, including offerings from OpenAI, Anthropic, and xAI.

Despite this high-profile Microsoft alliance, Perplexity has made it clear that Amazon Web Services (AWS) remains its “preferred” cloud provider. A company spokesperson emphasized that AWS will continue to be central to its operations, with further expansions of that partnership expected in the coming weeks.

This dual-cloud strategy highlights Perplexity’s ambition to scale rapidly while navigating the complex landscape of cloud computing giants. For Microsoft, the deal is a major win in its bid to position Azure as the premier destination for building and deploying next-generation AI applications.

Founded in 2022 by Arvind Srinivas, Denis Yarats, Johnny Ho, and Andy Konwinski, Perplexity has quickly become a formidable challenger to Google’s search dominance. The startup, which recently achieved a $20 billion valuation after a $200 million funding round last September, uses AI to deliver conversational, context-aware answers by scraping the internet in real time.

But this disruptive approach has not come without controversy. Perplexity has found itself at the center of legal battles and accusations from major media outlets and tech giants alike.

In a high-profile dispute with Amazon, the e-commerce behemoth sued Perplexity in November, alleging that its AI browser agent, Comet, was making unauthorized purchases on behalf of users—an act Amazon claims constitutes “computer fraud.” The lawsuit underscores the growing tensions between AI-driven automation and traditional e-commerce models.

Meanwhile, Perplexity has faced backlash from publishers over its content-scraping practices. The BBC has threatened legal action, while the New York Times sent a cease-and-desist letter demanding the startup stop using its content to train AI models. Similar accusations have come from Wired and Forbes, with Cloudflare even delisting Perplexity for allegedly circumventing website blocks to harvest data.

Despite these challenges, Perplexity’s momentum shows no signs of slowing. The company is part of a broader shift toward “agentic AI,” where intelligent agents can perform tasks—including online purchases—on behalf of users. Google and OpenAI are also exploring similar capabilities, signaling a major transformation in how consumers interact with the internet.

As the AI search wars heat up, Perplexity’s bold moves—both in technology and partnerships—position it as a key player to watch. With Microsoft’s backing and a relentless drive to innovate, the startup is poised to reshape the future of search, even as it navigates the legal and ethical minefields of the AI era.

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