According to Silicon Republic, AI-powered search engine Perplexity has signed a massive three-year, $750 million deal with Microsoft to use its Azure cloud service. The deal, reported by Bloomberg, will let Perplexity deploy AI models through Microsoft’s Foundry services, including models from OpenAI, Anthropic, and xAI. Despite this huge commitment, Perplexity clarified that Amazon Web Services (AWS) remains its “preferred” cloud infrastructure provider, with expansions to that partnership coming soon. The startup, founded in 2022 by Arvind Srinivas, Denis Yarats, Johnny Ho, and Andy Konwinski, was valued at $20 billion after a $200 million raise last September. This move is a major win for Microsoft in its push to make Azure the top destination for building AI applications.
The Cloud Provider Poker Game
Here’s the thing: this deal is a masterclass in strategic hedging. Perplexity is taking a colossal $750 million from Microsoft, but is immediately telling the world its heart still belongs to AWS. That’s not just corporate politeness—it’s a power play. It tells me they’re negotiating from a position of strength, using one tech giant as leverage against the other. For Microsoft, the headline win is everything. They get to say they’ve landed one of the hottest AI startups, which helps Azure’s credibility in the cutthroat AI infrastructure race. But you have to wonder, how “preferred” can AWS really be if you’re signing a three-quarter-billion-dollar deal with its arch-rival? It seems like Perplexity is playing both sides to guarantee the best rates, services, and maybe most importantly, access. Microsoft’s Foundry service is basically a backstage pass to top models from OpenAI and others, which is probably the real prize here.
It’s About More Than Just Search Wars
Everyone focuses on Perplexity vs. Google, but the real story might be its expanding scope—and the legal headaches that come with it. The company is already in a legal fight with Amazon over its AI agent, Comet, allegedly making purchases online. And they’ve gotten cease-and-desist notices from the New York Times and the BBC for scraping content. They even got delisted by Cloudflare for sneaky crawling. This paints a picture of a company moving fast and breaking things, trying to build an AI that doesn’t just answer questions but does things. That’s a much bigger ambition than search. If AI agents that can shop and interact with the web become mainstream, the infrastructure needs—and the cloud bills—will be astronomical. This Azure deal might be less about today’s search queries and more about funding tomorrow’s autonomous agent platform.
What This Means For Everyone Else
For other startups and developers, this is a signal. The cloud wars have entered a new, aggressive phase centered on AI. The big providers aren’t just selling compute and storage anymore; they’re selling packaged access to the most powerful AI models and the tools to build with them. That’s becoming the real differentiator. For enterprises looking to adopt AI, it reinforces that multi-cloud is the only sane strategy to avoid lock-in and keep costs competitive. And for the tech ecosystem? It shows that even at a $20 billion valuation, you still need the deep pockets and infrastructure of the established giants. No one builds the future alone anymore—not even the hottest AI startup. They all need the industrial-scale computing power that platforms like Azure provide.
