Microsoft Inks $750 Million Cloud Deal to Power Perplexity’s AI Search
Microsoft has locked in a massive $750 million cloud computing agreement with Perplexity, cementing its role as the back-end for the search engine currently challenging Google’s dominance. The three-year deal, first reported yesterday, integrates Perplexity into the Azure Foundry program. This move gives the startup the specialized compute and high-speed networking required to run the next generation of large language models (LLMs).
By moving to Azure, the Nvidia-backed startup gains a direct pipeline to frontier models from OpenAI, Anthropic, and even Elon Musk’s xAI. A Perplexity spokesperson confirmed the partnership, stating the goal is to secure guaranteed access to the most advanced reasoning engines on the market. For Microsoft, the win bolsters an Azure division that recently cleared $50 billion in quarterly revenue, proving that even in a cooling market, being the "landlord of AI" remains a lucrative business.
A Pre-emptive Strike Against Amazon
The deal smells like a pre-emptive strike against Amazon. For years, Perplexity leaned on Amazon Web Services (AWS), but that relationship soured following a lawsuit filed by the retail giant last year. Amazon targeted Perplexity’s "agentic" shopping features, alleging the startup’s bots bypassed security measures to place orders while masquerading as human browsers.
While Perplexity claims AWS remains its "preferred provider" and that no existing spend is being diverted, the move to Azure suggests a more cynical reality. This isn’t just a "multi-cloud strategy" for hardware redundancy; it’s a legal and technical hedge. By diversifying its infrastructure, Perplexity ensures that if its relationship with Amazon collapses entirely under the weight of litigation, its search engine won’t go dark. For users, the immediate benefit will likely be a reduction in "model-switching" latency, as Azure Foundry allows Perplexity to flip between GPT and Claude models with fewer bottlenecks than a single-cloud setup.
Microsoft’s New Proxy War with Google
This partnership isn’t just about selling server space; it’s about Microsoft’s broader attempt to dismantle Google’s search monopoly via proxy. By providing the "picks and shovels" to a nimble competitor like Perplexity, Microsoft can chip away at Google’s market share without the antitrust scrutiny that would follow a direct acquisition.
For Perplexity, the deal provides a concrete capital buffer. Rather than relying on a vague "infrastructure runway," the startup now has a fixed three-year commitment for high-performance H100 and B200 GPU clusters. This allows them to scale their "Pro" features—like real-time data synthesis and deep research agents—without the constant fear of being throttled by their cloud provider.
The inclusion of xAI models in this agreement is particularly telling. It suggests Perplexity is moving beyond being a simple wrapper for OpenAI. They are building a tool designed to aggregate the world's most powerful reasoning engines, using Microsoft’s infrastructure as the connective tissue. As the legal battle with Amazon intensifies, this $750 million commitment provides Perplexity with the technical firepower to stay relevant in an increasingly crowded—and litigious—AI landscape.