Perplexity bills itself as a direct AI-powered alternative to Google.
While Google operates a search engine, Perplexity aims to operate an AI answer engine that allows users to “ask any question.” Then it “searches the Web to give you an accessible, conversational, and verifiable answer.” according to the company's frequently asked questions. If that sounds like an AI-enhanced version of search, you'd be right.
There is no doubt that it has been an unabashed success since its launch in 2022, but it is now facing litigation.
Information Corp has officially filed a lawsuit against Perplexity AI over allegations that the startup has committed copyright infringement on a “massive scale.” The suit, unveiled on Monday, alleges that Perplexity pulled news, opinion and analysis directly from its Wall Road Diary and New York Post publications. This is not the first time the AI application has been criticized for its business practices, and it likely won't be the last.
A new type of search
Perplexity does not use proprietary AI, like Anthropic, OpenAI or Google do. Those models have their own legal issues, but Perplexity is different in that it relies on open source and commercially available models to process the information it pulls from the public web.
Perplexity's value proposition is instead to insert itself between content and search producers as a middleman, training its AI on copyrighted content that its chatbot will then regurgitate (often word for word, depending on demand) to its own paying customers, without compensating or attributing the original content producers.
Their summaries effectively allow users to “skip the links” provided by Google Search and access high-quality information directly through their chatbot. And therein lies the problem.
At least in theory, Google Search and news sites have had a symbiotic (if tenuous) relationship with Google, which earns advertising revenue from its search results while also driving traffic to those sites. Content publishers earn revenue through ads placed on the publishing page itself, resulting in both parties receiving payments, traffic flowing freely to independent sites, and few paywalls standing in the way.
This might seem like a more harmonious alliance than it really is, especially considering a recent ruling by the Department of Justice. But it is the system that has led to the Web that we all enjoy today.
Perplexity is something new. By its nature as an answer engine, Perplexity does not drive click traffic to independent sites. It's not hard to see why a company like Information Corp might see Perplexity as a real enemy of its operations.
However, the plot revolves around much more than simply dealing with new competition.
The History of Perplexity's Sticky Finger Behavior
The company has already been criticized by editors and content creators several times in 2024 alone. In June, for example, Forbes chief content officer Randall Lane accused Perplexity of “deliberate infringement” of Forbes reporting.
According to Lane, the chatbot attempted to lend credibility to the story it presented by citing other reports, which ended up being just added stories covering the actual Forbes publication. That is, if the New York Times publishes a post and The Verge, TechCrunch, and Digital Tendencies cover it, Perplexity's AI would cite all of those individual posts as citations for the NYT article, which is not how citations work. What's more, the AI sent a push notification to its subscribers imploring them to read its regurgitated report, along with an AI-generated podcast and YouTube video about it.
Lane noted that the video “beats all Forbes content on this topic in Google search.” Aravind Srinivas, CEO of Perplexity responded on Twitter that “we agree with the comments you have shared that it should be much easier to find contributing sources and highlight them more prominently.”
Forbes also claims that Perplexity helped itself with an exclusive (and paid) story about former Google CEO Eric Schmidt's efforts to build militarized drones. Perplexity's summary reportedly lifted entire passages verbatim and was subsequently viewed more than 30,000 times. “Our report on Eric Schmidt's stealth drone project was published this morning by @perplexity_ai,” Forbes executive editor John Paczkowski. he wrote in X. “That throws off most of our reporting. He cites us, and some who reblogged us, as sources in the most easily ignored way possible.”
In July, Condé Nast sent a cease-and-desist letter to Perplexity, again accusing it of stealing content from The New Yorker, Vogue, and Wired, the latter of which published its own damning report on Perplexity's actions.
“According to the server logs, that same IP [believed to belong to Perplexity’s web crawler] “I visited properties owned by Condé Nast, the media company that owns Wired, at least 822 times in the last three months.” Tim Marchman wrote for Wired. He notes that that figure is “probably a significant undercount, because the company retains only a small portion of its records.”
The New York Times went on to send its own cease-and-desist letter to Perplexity in October. The publication claims that the startup's actions in extracting and summarizing its stories violate copyright law. The letter demands that Perplexity “immediately cease and desist all current and future unauthorized access to and use of Occasions content.”
Too little too late?
Don't expect Perplexity's legal problems to subside anytime soon. Even with the normal decline of online journalism in recent decades, industry heavyweights like Condé Nast and New Corps may still be making too much money to simply give up.
Information Corp's lawsuit also alleges that Perplexity routinely hallucinated and misrepresented facts in its responses, “sometimes citing an incorrect source, and other times simply fabricating and attributing fabricated news to plaintiffs.”
But time may not be on your side. Roger Lynch, chief executive of Condé Nast, warned in January that because of the enormous timeframes needed to litigate AI, “many media companies will go out of business” before reaching court. The lawsuit also notes that Information Corp contacted Perplexity about its behavior in July. The startup reportedly “didn’t bother” to respond.
Meanwhile, Perplexity, which is backed by Jeff Bezos, is reportedly in talks for a $9 billion valuation in a new funding round.
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