Stock Market News – News Corp Takes Legal Action Against AI Startup Perplexity: What You Need to Know

Stock Market News – Media giant News Corp, which owns Dow Jones & Co. (publisher of the Wall Street Journal) and the New York Post, has filed a federal lawsuit against AI startup Perplexity. The lawsuit alleges that Perplexity has engaged in a “massive amount of illegal copying” of copyrighted materials from publishers, diverting customers and crucial revenue away from these copyright holders.

In response, Perplexity expressed disappointment in a blog post, stating, “We were surprised to see this.” The company criticized the lawsuit as a reflection of an “adversarial posture” between media and technology that is not only shortsighted but also self-defeating. They emphasized the importance of collaboration, asserting, “We should all be working together to offer people amazing new tools and build genuinely pie-expanding businesses.” Perplexity noted its successful revenue-sharing programs with other publishers, such as Time, Fortune, and Der Spiegel, indicating an openness to work with News Corp in good faith.

The Growing Trend of Lawsuits Against AI

Perplexity has reported that around three dozen lawsuits have been filed by media companies against makers of generative AI tools. Notably, the New York Times Co. has also sued OpenAI and Microsoft on similar copyright infringement grounds. Just last week, the New York Times sent Perplexity a cease-and-desist notice, demanding it stop using their content and claiming that Perplexity’s system infringes on its copyrights.

Perplexity’s blog post pointed out a troubling theme in these complaints: “They wish this technology didn’t exist,” arguing that media companies prefer a world where publicly reported facts are owned by corporations and cannot be used without payment.

News Corp’s Strong Stance

News Corp CEO Robert Thomson has been vocal in his criticism of Perplexity, accusing the company of “willfully copying copious amounts of copyrighted material without compensation.” He further alleged that Perplexity “shamelessly presents repurposed material as a direct substitute for the original source.”

In defense, Perplexity argued that the allegations in the Dow Jones/New York Post lawsuit are “misleading at best.” The company asserted that the examples cited as “regurgitated” outputs mischaracterize the source material. Perplexity clarified that its system is not intended for “reprising the full text of articles that can be more directly and efficiently obtained elsewhere.”

Communication Breakdown and Future Prospects

According to the lawsuit, in July 2024, Dow Jones and the Post reached out to Perplexity, alerting them to legal issues related to the unauthorized use of their copyrighted works and offering to discuss a potential licensing deal. Perplexity claims they responded promptly but were met with a lawsuit instead of further dialogue.

The AI startup also highlighted inconsistencies in the media companies’ claims, stating that when pressed for details in litigation, they often disavow the very examples they previously cited in public records. “We presume that is what will happen here,” Perplexity added, suggesting that this pattern indicates weaknesses in the case against them.

In a display of confidence, Perplexity noted that earlier this year, the Wall Street Journal ranked it as the No. 1 overall chatbot in its “Great AI Challenge,” outperforming competitors like OpenAI’s ChatGPT, Microsoft’s Copilot, Google’s Gemini, and Anthropic’s Claude.

A Call for Collaboration

Perplexity concluded its blog post with a strong message: “Perplexity is not going away.” The company looks forward to a future focused on providing innovative tools in collaboration with media companies, emphasizing the need for partnership in a rapidly evolving digital landscape. As the legal battles continue, the question remains: will media companies adapt to the changing technological landscape, or will they risk being left behind?