AI Recommendations Favor Businesses It Understands, Not the Best

New research shows ChatGPT and Perplexity recommend companies with stronger digital footprints, not necessarily higher quality

Apr. 3, 2026 at 4:05pm

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A highly detailed, glowing 3D illustration of a complex network of interconnected digital elements in shades of neon cyan and magenta, conceptually representing an AI-powered recommendation system that prioritizes structured data over human-centric quality signals.As AI-powered recommendations become the dominant way consumers discover businesses, the platforms' focus on structured digital data over human-centric quality signals is creating new challenges for established companies.Houston Today

New research reveals that AI recommendation platforms like ChatGPT and Perplexity do not actually recommend the highest-quality businesses in a given market. Instead, they tend to suggest companies with stronger "entity authority" - a measure of how much structured, consistent information the AI has about a business across the web. This means newer competitors with better digital presences often get recommended over more established, higher-quality businesses that built their reputations through offline channels before the digital era.

Why it matters

As AI-powered recommendations become the primary way consumers discover local businesses, this trend puts established companies at a disadvantage. Quality alone is no longer enough - businesses must also focus on building a robust digital footprint that AI systems can easily understand and trust, even if that footprint doesn't reflect the full scope of the company's real-world reputation and expertise.

The details

The research found that AI platforms like ChatGPT and Perplexity do not actually consult review aggregators or quality ratings when making recommendations. Instead, they rely on "entity authority" - the volume and consistency of structured data about a business across directories, websites, and other online sources. This means newer competitors that have invested heavily in SEO, schema markup, and review acquisition can often outrank more established businesses, even if the older company has better service, a longer track record, and higher customer satisfaction.

  • The research was conducted in 2026, as AI-powered recommendations became increasingly prevalent.
  • ChatGPT reached 800 million weekly users in September 2025, making it the 5th most visited platform on the internet.
  • Gartner forecasts a 25% decline in traditional search volume by 2026 as AI platforms absorb more recommendation queries.

The players

ChatGPT

An AI-powered chatbot developed by OpenAI that has become one of the most widely used AI recommendation platforms.

Perplexity

Another AI assistant that provides recommendations and advice to users, similar to ChatGPT.

Lily Ray

The Senior Director of SEO and Head of Organic Research at Amsive Digital, an agency that has studied the impact of AI recommendations on businesses.

Gartner

A leading research and advisory firm that has forecasted the decline of traditional search volume as AI platforms absorb more recommendation queries.

Yazeo

A Houston-based firm that specializes in helping businesses optimize their "entity authority" to improve AI recommendation visibility.

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What they’re saying

“The way AI platforms build trust in a business has almost nothing to do with how consumers build trust in a business. Consumers use experience, word of mouth, and reputation. AI platforms use structured data, citation density, and content extractability. You need to optimize for both audiences now and they require completely different work.”

— Lily Ray, Senior Director of SEO and Head of Organic Research, Amsive Digital

“Gartner's data is clear that by 2026, a significant share of traditional search volume will have shifted toward AI-assisted discovery. The businesses with the strongest entity authority going into that transition will capture the most benefit from it. The ones with weak entity authority will lose ground that compounds over time.”

— Gartner Research

What’s next

Businesses that want to improve their visibility in AI-powered recommendations will need to focus on building their "entity authority" through tactics like citation management, content optimization, schema markup implementation, and review acquisition strategies tailored to the platforms AI systems prioritize.

The takeaway

As AI-powered recommendations become the dominant way consumers discover local businesses, companies can no longer rely on quality and reputation alone. They must also invest in building a robust digital footprint that allows AI systems to easily understand and trust their business, even if that footprint doesn't fully reflect their real-world expertise and customer satisfaction.