News Corp filed a lawsuit against Perplexity AI on October 22, 2024, charging the AI-powered answer engine with reproducing its copyrighted material without consent, reportedly costing News Corp significant ad revenue by diverting readers away from its websites. News Corp, which owns major publications such as The Wall Street Journal and New York Post, claims Perplexity’s model uses its articles to generate summaries, demanding up to $150,000 per alleged copyright infringement in one of the most substantial claims between media and AI firms over content rights.
Perplexity Pushes Back, Calls Claims “Outdated”
Perplexity AI’s response to the allegations came swiftly. The company, which uses an “answer engine” to instantly provide summarized answers sourced from various publications, argues that it aggregates factual content without violating copyright protections. Perplexity claims that many media companies are trying to hold back new technology, accusing publishers of preferring “a world where publicly accessible facts are controlled by corporations.” CEO Aravind Srinivas asserted that Perplexity follows standard data practices, including observing the robots.txt files used to limit automated web crawlers, although he acknowledged the company cannot control every third-party source’s adherence to these protocols.
An answer engine like Perplexity, as opposed to a conventional search engine, directly provides synthesized answers without requiring users to click on individual search results, which raises concerns among publishers about traffic loss and revenue impact. According to Srinivas, Perplexity offers “accountable access” by using clear citations and by pulling factual content rather than entire articles. However, The New York Times recently issued a cease-and-desist letter, warning Perplexity to cease summarizing its articles by the end of the month or face additional legal action, highlighting growing tension.
Rising Scrutiny from Media Outlets
Perplexity’s business model has drawn criticism not only from News Corp but also from other leading media outlets. Forbes and Wired reported cases where Perplexity allegedly reproduced parts of their articles too closely, leading Forbes to label certain summaries as barely modified reproductions of its original content. In response, Perplexity has attempted to collaborate with publishers by launching a revenue-sharing initiative, offering advertising-based compensation for publishers that partner with the AI platform. This program includes prominent partners like TIME, Fortune, and The Texas Tribune, although its reach remains limited due to hesitations among some media groups.
The stakes are high for publishers as traditional ad-driven revenue models face challenges in the digital age. Revenue-sharing programs like Perplexity’s are designed to enable content creators to benefit when their work is incorporated into AI search results that generate advertising revenue. Such initiatives reflect a broader shift toward cooperation, though many media companies remain cautious of how these models impact their visibility and control over content distribution.
OpenAI’s Content Licensing Model: A Different Approach
While Perplexity stands firm on its stance that facts remain free to aggregate, other AI companies have adopted licensing strategies to sidestep legal disputes. OpenAI, for instance, signed a $250 million deal with News Corp earlier this year, which gives it permission to legally incorporate News Corp’s content into its models for ChatGPT. News Corp openly commended OpenAI’s approach as a “respectful” and “principled” framework for AI content use, implying that Perplexity’s practices lack similar integrity.
This partnership with News Corp is just one example in a trend toward licensing agreements, with OpenAI also forming partnerships with Reddit and Stack Overflow to secure training data for its AI models. Licensing arrangements serve as formal solutions to avoid copyright infringement, but for startups like Perplexity, such deals may present financial hurdles, limiting options for smaller firms facing rising operational costs and competitive market pressure.
Investor Interest Amid Legal Risks
Despite legal obstacles, Perplexity is pushing ahead with rapid expansion, reportedly seeking $500 million in new funding that could double its valuation to nearly $8 billion. This potential fourth funding round in under a year indicates high investor confidence in the platform, even as copyright lawsuits present growing concerns for AI companies. Perplexity’s growth includes features targeted at business clients, such as its Internal Knowledge Search—a tool allowing users to search both internal documents and web data simultaneously, supporting file formats like PDFs and Excel for an integrated search experience.
The company’s latest feature addition, Spaces, provides collaborative hubs for document management and allows teams to customize search behaviors using AI. The tool offers enhanced security settings for Enterprise Pro accounts, enabling firms to safeguard sensitive data against unintended use in model training.
The Complex Issue of Content Scraping and Copyright in AI
Beyond Perplexity’s approach, the question of how AI platforms access content has become a central issue in the industry. Websites commonly employ robots.txt files, a web standard that directs which parts of a site may be indexed by search engines, to limit unauthorized data collection. Perplexity claims adherence to these protocols, yet its reliance on multiple sources to synthesize answers raises concerns among publishers who question the platform’s model.
The practice of indexing and summarizing articles, long used by search engines, is complicated when AI-driven tools bypass publisher sites by delivering summaries directly to users, reducing click-through traffic and potentially impacting ad revenue.