AI Startup Perplexity Sued by Dow Jones and New York Post Over Copyright Violations

News Corp's Dow Jones & Co., publisher of *The Wall Street Journal* and *The New York Post*, has filed a lawsuit against Perplexity, an AI-powered startup, for alleged copyright infringement. The lawsuit, filed in the U.S. District Court for the Southern District of New York, claims that Perplexity engages in unauthorized use of copyrighted content to drive traffic to its platform, which positions itself as an "AI-powered Swiss Army Knife for information discovery." According to the lawsuit, Perplexity illegally copies and repurposes publishers’ content without permission, allowing users to access information without clicking through to the original sources, thus diverting traffic and revenue from the content creators.

The legal action follows a warning letter sent by Dow Jones and *The New York Post* in July 2024, notifying Perplexity of the alleged violations and offering to discuss a potential licensing agreement. However, the plaintiffs claim that Perplexity did not respond to the letter. The lawsuit seeks to stop Perplexity from using their copyrighted content and demands statutory damages, potentially reaching $150,000 per infringement, along with actual damages and profits derived from the unauthorized use.

This case is part of a broader wave of legal challenges in the AI space, where news organizations and content creators are increasingly pushing back against AI companies they claim are exploiting their copyrighted material. The *New York Times* recently sent a cease-and-desist letter to Perplexity, accusing the company of similar copyright violations, and has also taken legal action against OpenAI and Microsoft on similar grounds.

Perplexity is reportedly in the process of raising around $500 million in new funding, which would more than double its valuation to $8 billion. The startup counts influential backers such as Jeff Bezos, SoftBank's Vision Fund 2, and Nvidia, all of whom have stakes in its success amid the rising demand for AI-driven applications.

News Corp CEO Robert Thomson issued a strong statement against Perplexity, accusing the company of "willfully" copying large amounts of copyrighted material and presenting it as a substitute for original journalism. Thomson emphasized that News Corp’s legal challenge aims to protect the integrity of journalism and combat what he described as a "content kleptocracy." He contrasted Perplexity’s actions with News Corp’s existing licensing agreement with OpenAI, which pays the media conglomerate licensing fees potentially worth over $250 million in exchange for content use.

The lawsuit highlights the increasing friction between traditional media companies and AI platforms that leverage copyrighted content without proper compensation. As AI systems like Perplexity grow in popularity for their ability to generate instant responses by repurposing content, the legal landscape surrounding copyright infringement is becoming more complex. Media companies argue that these AI models benefit from the hard work of journalists, writers, and publishers, without offering due credit or payment, leading to potential revenue losses for original content creators.

As more publishers step forward to defend their intellectual property rights, the resolution of these cases will likely set important precedents for how AI companies must navigate copyright law. A ruling in favor of the media companies could compel AI platforms to enter licensing agreements or develop new methods for compensating original content producers. Conversely, a ruling in favor of the AI companies may redefine the boundaries of "fair use" in the digital age, potentially encouraging further adoption of generative AI technologies across industries.

This growing legal debate underscores the broader challenges posed by AI and content creation in an evolving digital economy. It could also lead to regulatory changes or new frameworks for balancing innovation with intellectual property protection, as both sectors seek clarity on how to operate within this rapidly changing environment.