Perplexity said on Tuesday that it has brought the engineering and product team from Visual Electric into its fold, a deal the companies described as an acquisition of personnel and know‑how rather than of standalone products. Terms were not disclosed. Visual Electric, which raised seed funding from Sequoia and built tools for image generation and, more recently, video generation, said it will wind down its standalone operations as the team joins Perplexity’s search and generative‑AI efforts.

The transaction comes as search startups and big tech companies increasingly treat generative visual and video capabilities as essential differentiators. “This acquisition will accelerate Perplexity’s ability to deliver multimodal answers and creative tools directly in search,” a Perplexity spokesperson said in a company statement. Visual Electric said joining Perplexity would allow its researchers and engineers to scale their work within a broader search and product context.

Perplexity, which has positioned itself as an AI‑centric alternative to incumbent search engines, has expanded beyond text‑based answers into richer, interactive outputs. Adding Visual Electric’s expertise in generative design and early video synthesis gives Perplexity technology assets and talent that could shorten its timeline for deploying high‑quality visual generation inside search results and chat interfaces.

Market implications are immediate. Embedding robust image and video generation into search could shift user behavior, drawing more creative use cases into search platforms and increasing time spent with those services. For advertisers and content platforms, that raises questions about content provenance, copyright risk and moderation costs: generated visuals and short video clips complicate attribution and could increase liabilities for platforms that host or amplify synthetic media.

Analysts say the deal also reflects a pragmatic labor market dynamic. With large language model providers increasingly focused on multimodal models and infrastructure, smaller startups that built niche capabilities are often acquired for talent and IP rather than for standalone commercial traction. “We’re seeing more acqui‑hires where the product is folded into a larger platform,” said an independent AI industry analyst. “It’s faster for major players to integrate a team that already understands video generation than to build from scratch.”

Policy questions follow. Regulators scrutinizing tech consolidation have focused on data access, platform control and competition; acquisitions that concentrate specialized AI talent in a few search incumbents could draw additional attention if they materially affect competitive dynamics. There are also pressing concerns around model safety and content labeling, an area where per‑platform policies—like recent moves to label AI‑generated music or filter synthetic spam on streaming services—are evolving but uneven.

Longer term, the acquisition underlines an industry shift toward multimodal search experiences that blend text, image and video generation. For Perplexity, the deal is a bet that answering queries with synthesized visuals will be a key frontier in search monetization and engagement. For the wider ecosystem, it underscores that the battle for AI talent and multimodal capability remains central to who will lead the next wave of internet platforms.