News Summary

Snap’s anticipated $400 million deal with Perplexity AI to integrate AI search technology into Snapchat has been terminated. Initially announced in November, the partnership aimed to incorporate Perplexity’s AI search capabilities into the Snapchat app, expecting to generate revenue by early 2026. However, the partnership was dissolved earlier this year due to incompatibility with each company’s product goals. As a result of the collapse, Snap is set to lay off about 1,000 employees, which constitutes 16% of its workforce. This move follows pressure from activist investor Irenic Capital Management to optimize operations and enhance AI usage. Despite the setback, Snap continues to explore other revenue-generating AI initiatives, like the introduction of ‘AI Sponsored Snaps’ to monetize user interactions. Additionally, Snap plans to showcase its new augmented reality glasses, Specs, at the upcoming Augmented World Expo in California.