Pressure on perplexity is increasing.
The AI-powered search engine, once the darling of the tech world for its ability to provide concise answers to complex queries, is facing lawsuits from major publishers that could threaten its existence.
Chicago Tribune And the new York Times has filed Complaints alleging copyright infringementArguing that Perplexity was illegally using their stories to power its product.
To examine why this could be the beginning of the end for Perplexity as an independent company, I discussed the legal action with Paul Roetzer, founder and CEO of SmarterX and the Marketing AI Institute. Episode 184 of the Artificial Intelligence Show.
Legal storm intensifies
The allegations against Perplexity are condemnable.
Chicago Tribune filed a Complaint Arguing in federal court that Perplexity used the newspaper’s content for its own benefit. The lawsuit targets Perplexity’s use of Retrieval-Augmented Generation (RAG), a method that verifies data sources and reduces hallucinations.
Tribune The allegation is that Perplexity’s system bypasses its paywall to produce detailed summaries of articles without permission.
the new York Times Too filed a lawsuit againstAlleging similar claims. It states that the Perplexity search engine crawls the Internet to retrieve content reserved for paid subscribers.
Perplexity’s lawyers argue that the company did not use the material to train the models. But media publishers say the convenient summaries that Perplexity users love are built on stolen content.
And these are not isolated incidents. Dow Jones and reddit Litigation is also being done against the startup.
leverage problem
On the surface, this looks like the standard publisher vs. AI narrative we’ve seen with the lawsuits against OpenAI and Google.
But Roetzer says the dynamics here are fundamentally different.
When publishers sue OpenAI or Google, those tech companies have a bigger card: They own the underlying models, and they control the primary gateway to information for billions of users. Publishers need them to survive effectively in the digital ecosystem.
There is no strength in confusion.
“They have no leverage in this situation,” Roetzer says. “So if you come at OpenAI or Anthropic or Google for these same allegations, the advantage they have is they have a huge user base and they’re building models and media companies need them.”
Tangle, on the other hand, relies heavily on using other companies’ models to power its product.
“Media companies don’t need confusion,” Roetzer says.
A battle they can’t win?
This means that the tangle is unsafe.
Big tech players can cut nine-figure licensing deals to fend off lawsuits. Meta or OpenAI could give publishers access to real-time data and billions of dollars over many years.
“I think they’re going to have to settle these lawsuits or they’re going to lose their company,” Roetzer says.
Due to this the company has reached a critical situation. If they can’t license the data because they can’t afford it, and they can’t win lawsuits because publishers want to bury them, the future looks bleak.
Roetzer believes the state of perplexity represents difficult terrain for all startups that have built products on top of other people’s content without the ability to protect themselves.
“It’s going to be brutal for some startups that don’t have leverage,” Roetzer says.
