Rupert Murdoch’s News Corp has filed a lawsuit against Perplexity AI, a generative artificial intelligence startup. The lawsuit, lodged in the U.S. District Court for the Southern District of New York, accuses Perplexity of engaging in “massive freeriding” by illegally scraping content from News Corp’s publications, including the Wall Street Journal and the New York Post. The complaint alleges that Perplexity has been using copyrighted material to train its AI systems, allowing users to bypass the original publishers’ websites.
The lawsuit claims that Perplexity’s business model relies on the unauthorized use of protected content, which directly competes with the publishers for audience engagement. This practice, according to the complaint, deprives News Corp of essential revenue sources. “What Perplexity does not tout is that its core business model involves engaging in massive freeriding on Plaintiffs’ protected content to compete against Plaintiffs for the engagement of the same news-consuming audience,” reads the complaint.
Robert Thomson, the chief executive of News Corp, criticized Perplexity, asserting that the company has “willfully copied copious amounts of copyrighted material without compensation.” He emphasized that Perplexity presents repurposed material as a substitute for the original sources, undermining the work of journalists and publishers. “Perplexity proudly states that users can ‘skip the links’ — apparently, Perplexity wants to skip the check,” he added.
Background of the Lawsuit
The lawsuit comes amid growing concerns among news publishers regarding the use of their content by AI companies. Many publishers argue that the scraping of their reporting without permission poses an existential threat to their business models. While some have opted to license their content to AI firms for modest fees, others have chosen to pursue legal action to protect their intellectual property.
Earlier this year, News Corp entered into a licensing agreement with OpenAI, the creator of ChatGPT, reportedly worth over $250 million. Thomson noted that OpenAI’s approach differs from that of Perplexity, stating that the former “understands that integrity and creativity are essential if we are to realize the potential of Artificial Intelligence.” He expressed a commitment to pursuing other AI companies that may be infringing on intellectual property rights, stating, “We have made clear that we would rather woo than sue, but, for the sake of our journalists, our writers and our company, we must challenge the content kleptocracy.”
The lawsuit against Perplexity is not an isolated incident. Just days before, The New York Times sent a cease-and-desist letter to Perplexity, demanding that the startup cease using its content. The Times accused Perplexity of unjust enrichment through the unauthorized use of its carefully crafted journalism. The newspaper has also filed a lawsuit against OpenAI for similar copyright infringement claims.
Perplexity’s Response
As of now, Perplexity has not publicly responded to the lawsuit or the allegations made against it. The company, which describes itself as an “AI-powered Swiss Army Knife for information discovery and curiosity,” is reportedly seeking to raise around $500 million in new funding. This funding round aims to more than double its valuation to approximately $9 billion. Notable investors in Perplexity include Amazon founder Jeff Bezos, SoftBank Group Corp.’s Vision Fund 2, and chip maker Nvidia.
The lawsuit seeks to prevent Perplexity from continuing its alleged unlawful practices and demands statutory damages for copyright infringement. The damages could amount to $150,000 for each infringement, along with actual damages and profits derived from the unauthorized use of News Corp’s copyrighted works.
This latest legal battle sheds light on the ongoing tension between traditional media companies and the rapidly expanding AI technologies. News Corp’s actions reflect a broader trend among publishers to protect their content in an era where AI tools are evolving and reshaping the landscape of information consumption.
The outcome of this lawsuit could have important implications for the future of content licensing and the relationship between media companies and AI startups.
(Image by Alex Proimos)
