The pressure is mounting on Perplexity.
The AI-powered search engine, once the darling of the tech world for its ability to deliver concise answers to complex queries, faces a barrage of lawsuits from major publishers that could threaten its existence.
The Chicago Tribune and The New York Times have filed complaints alleging copyright infringement, arguing that Perplexity is illegally using their stories to power its product.
To examine why this might be the beginning of the end for Perplexity as an independent company, I discussed the legal action with SmarterX and Marketing AI Institute founder and CEO Paul Roetzer on Episode 184 of The Artificial Intelligence Show.
The Legal Storm Intensifies
The allegations against Perplexity are damning.
The Chicago Tribune filed a complaint in federal court arguing that Perplexity uses the newspaper’s content for its own profit. The suit targets Perplexity’s use of Retrieval-Augmented Generation (RAG), a method that verifies data sources and reduces hallucinations.
The Tribune alleges that Perplexity’s system bypasses its paywall to generate detailed summaries of articles without permission.
The New York Times also sued, alleging similar claims. It says that the Perplexity search engine crawls the internet to retrieve content reserved for paid subscribers.
Perplexity’s lawyers argue the company didn’t use the content to train models. But the media publishers say the convenient summaries Perplexity users love are built on stolen material.
And these aren't isolated incidents. Dow Jones and Reddit are pursuing litigation against the startup, too.
The Leverage Problem
On the surface, this looks like the standard publishers vs. AI narrative we’ve seen with lawsuits against OpenAI and Google.
But Roetzer says the dynamics here are fundamentally different.
When publishers sue OpenAI or Google, those tech companies hold a massive card: They own the foundational models, and they control the primary gateways to information for billions of users. Publishers effectively need them to survive in the digital ecosystem.
Perplexity doesn't have that clout.
“They have no leverage in this situation,” says Roetzer. “So if you come at OpenAI or Anthropic or Google for these same allegations, the leverage they have is they have a massive user base and they're the ones building the models and the media companies need them.”
Perplexity, on the other hand, largely relies on using other companies' models to power their product.
“The media companies don't need Perplexity,” Roetzer says.
A Fight They Can’t Win?
All this means Perplexity is vulnerable.
Big tech players can afford to cut nine-figure licensing deals to make lawsuits go away. Meta or OpenAI can offer publishers access to real-time data and billions of dollars over several years.
“I think they're going to have to settle these lawsuits or they're going to lose their company,” says Roetzer.
This leaves the company in a precarious position. If they can’t license the data because they can’t afford it, and they can’t win the lawsuits because publishers want to bury them, the future looks bleak.
Roetzer believes Perplexity’s situation represents rough terrain for all startups that built products on top of other people’s content without the ability to fiercely defend themselves.
“It's going to be brutal for some startups that don't have leverage,” Roetzer says.
Mike Kaput
As Chief Content Officer, Mike Kaput uses content marketing, marketing strategy, and marketing technology to grow and scale traffic, leads, and revenue for Marketing AI Institute. Mike is the co-author of Marketing Artificial Intelligence: AI, Marketing and the Future of Business (Matt Holt Books, 2022). See Mike's full bio.