News Corp Sues AI Startup Perplexity Over Massive Copyright Infringement—A Battle for the Future of Journalism

News Corp Files Major Lawsuit Against AI Startup Perplexity, Alleging Copyright Infringement

On October 21, 2024, Rupert Murdoch's News Corp, through its subsidiaries Dow Jones and the New York Post, filed a significant lawsuit against the AI startup Perplexity, accusing the company of extensive copyright violations. The lawsuit represents an escalation in tensions between traditional news publishers and emerging AI companies as the digital landscape evolves. Here’s a detailed look at the key issues surrounding the case.

Allegations of Copyright Infringement

News Corp's lawsuit against Perplexity contains several major accusations, primarily centered on illegal content usage. The lawsuit alleges that Perplexity has been scraping copyrighted content from News Corp outlets, including the Wall Street Journal and the New York Post, without any form of authorization. Perplexity has allegedly used this content to train its AI “answer engine,” enabling it to respond to user inquiries without directing traffic to the original publishers.

The accusations against Perplexity include:

• Scraping Copyrighted Content: Illegally extracting and using copyrighted materials from News Corp publications.
• Diverting Web Traffic: Redirecting readers away from News Corp’s websites, which results in lost advertising and subscription revenue.
• Training AI Without Permission: Using copyrighted content to train AI systems without providing compensation to the original content creators.
• Freeriding on Journalistic Work: Relying on the work of journalists without giving due credit or financial compensation, which News Corp claims undermines the viability of professional journalism.

Robert Thomson, CEO of News Corp, emphasized the harm caused by Perplexity's actions, noting that they “willfully copied copious amounts of copyrighted material without compensation,” ultimately harming journalists, writers, and publishers.

Perplexity’s Business Model in Question

The lawsuit also raises concerns about Perplexity’s core business model. The startup’s AI platform allows users to receive direct answers without having to visit the original sources of information—a feature marketed as enabling users to “Skip the Links.” News Corp argues that this model is detrimental to publishers who rely on web traffic for their financial sustainability. According to the claims, Perplexity is actively competing with news organizations for the same audience while denying publishers the traffic they need to generate ad revenue.

This “answer engine” format means that Perplexity is, in essence, profiting from the efforts of journalists working under challenging conditions. News Corp insists that Perplexity’s actions amount to “massive freeriding” on work done by professional journalists, while at the same time allowing users to bypass the publishers' websites altogether.

News Corp's Legal Demands

In response to these alleged violations, News Corp is seeking significant legal redress. The lawsuit includes two major copyright infringement claims and demands an injunction to prevent Perplexity from further using News Corp's content. Specifically, News Corp is requesting:

• An Injunction: To prevent Perplexity from utilizing News Corp’s articles as the basis for answering user questions.
• Destruction of Databases: A court order mandating the destruction of any databases that have been built using News Corp’s copyrighted content.
• Financial Compensation: Damages for every instance of infringement, aimed at compensating News Corp for the losses incurred.

This lawsuit is part of a broader battle between traditional media companies and AI-driven platforms. Earlier this month, The New York Times issued a cease-and-desist letter to Perplexity, and in 2023, the Times sued OpenAI for similar copyright issues. Notably, News Corp had previously reached an agreement with OpenAI, reportedly valued at over $250 million, to license its content—a stark contrast to its current battle with Perplexity.

Industry Reactions and Divided Opinions

The lawsuit has sparked mixed reactions across the industry. Supporters of News Corp’s stance argue that Perplexity's actions exemplify a worrying trend of AI companies disregarding intellectual property rights. As the news industry faces increasing financial challenges, such unauthorized usage of content further exacerbates the economic pressures that threaten the future of traditional journalism. News Corp’s CEO, Robert Thomson, has made it clear that the company will “pursue with vigor and rigor” any AI firms that abuse intellectual property rights.

However, critics of the lawsuit argue that Perplexity's platform enhances access to information, enabling users to get answers faster and more efficiently. Supporters of Perplexity claim that providing brief answers with citations falls under “fair use,” and that the AI model credits original publishers where possible. Additionally, some AI advocates argue that this type of legal action could stifle innovation and create restrictive precedents, potentially hindering the development of AI-driven content aggregation.

A Broader Context: The Last Outcry of Traditional Media?

For some, this legal battle may signify the “last outcry” of traditional media against the inevitable rise of AI in content creation. AI technologies like Perplexity promise efficient and cost-effective ways for users to access information, bypassing traditional media intermediaries such as newspapers and magazines. As AI models improve, their reliance on human-generated content may decrease, thereby threatening the very core of traditional journalism—a profession that has long relied on advertising and subscription revenues.

The outcome of this lawsuit could also signify the beginning of a broader shift in power dynamics. If AI-driven content aggregation continues to grow unregulated, control over content production may shift away from journalists and publishers to software developers and AI platforms. This shift has been compared to previous industrial revolutions, where technology replaced labor-intensive jobs. In this case, AI could replace not just journalism but potentially other creative fields as well, with software engineers emerging as central players in content generation and distribution.

Conclusion

The lawsuit filed by News Corp against Perplexity is emblematic of a deeper, ongoing conflict between traditional media and AI companies. As news publishers struggle to remain viable in an increasingly digital world, AI-driven platforms are pushing boundaries that force the industry to reconsider the value and ownership of content. Whether News Corp succeeds in its legal efforts or not, this case will likely play a crucial role in shaping future relationships between the media and AI—raising important questions about intellectual property, fair compensation, and the sustainability of traditional journalism in the face of advancing technology.