New York Times takes Perplexity AI to court over ‘illegal’ copying of content

A huge Legal Battle is able to start in New York.

The New York Times has formally brought a major legal assault on the artificial intelligence-based startup Perplexity AI. The complaint also charges the tech company with duplicating and abusing millions of copyrighted articles illegally. The Times contends that Perplexity has been able to establish its business by stealing the efforts of the journalists without seeking their consent and without any fee. The case represents a significant upsurge of the prevailing clash between conventional media publishers and the artificial intelligence sector that is thriving.

The essence of the suit is that Perplexity is not a search engine, it is content replacement service. New York Times accuses the AI company of consuming its reporting, including the paywalled articles, to produce detailed summaries to users. These answers are very detailed and help Perplexity to obviate the necessity of a reader to access the real newspaper site. The Times considers this a direct threat to its business model, which is based on subscriptions and advertising income on visiting the site.

Freeriding Accusation on Journalism.

The New York Times refers to the business practices of Perplexity as freeriding on the investment of other parties in the legal filing. The newspaper mentions that high-quality journalism is expensive in terms of financial resources and talented reporters, as well as there is legal risk of it. According to them, Perplexity avoids these expenses by just picking the finished product and repackaging it as its own. That lawsuit alleges that such an unjust enrichment enables the AI startup to gain its profits off of content it has not made or compensated.

To drive the point home, The Times has done certain examples in its complaint. The legal department demonstrated the cases of where the chat bot of Perplexity copied large portions of articles almost word for word. There have been instances where the AI tool broke down a news story in such detail that the user would not feel the need of moving on to the source of the news. The newspaper insists that this is not a fair use but a commercial product, which is geared towards competition with other news outlets that it uses to provide information.

This legal argument is based on this idea of substitution. The old traditional search engines such as Google have in the past redirected traffic to sites by giving blue links. But the new generation of AI-based answer engines is also trying to retain the user on their site. New York Times says that when this model is allowed to win over, it might kill the economic fabric of the news industry. Publishers themselves cannot pay journalists to break the news in the first place without the money provided by the readers.

The Issue of “Hallucinations” and Damage of the Brand.

In addition to the problem of stealing, the suit addresses the problem of quality and brand loyalty. The New York Times accuses Perplexity of harming its brand by making the newspaper the source of the fake information. This is referred to in the world of artificial intelligence as a hallucination. It occurs when an artificial intelligence model is so sure that it can create facts or events that have not occurred and passes it as truth.

The complaint outlines cases where Perplexity used the New York Times as the source of information that was not covered by the paper. It claims in the case that it is a breach of trademark laws since it deceives the masses and destroys the reputation of the newspaper as being accurate. When a user reads a fake story that has been labeled as the Times, he/she can lose confidence in this outlet. The newspaper is also requesting to prevent Perplexity to use its trademarks in a manner that creates confusion or deception among the readers.

This element of the case indicates the technical shortcomings of existing generative AI applications. Although they are quite good at speaking and sounding like humans and exuding confidence, they are not always discriminating between fact and fiction. To a news organization which boasts of veracity, affiliation with AI created lies is a significant liability. The Times is asking the court to restrain Perplexity in its fraudulent activities that discriminate against the status of the newspaper.

Ignoring the “Stop” Signs

The court case has followed months of backdoor efforts to settle the dispute. The New York Times asserts that it had issued a cease-and-desist letter to Perplexity in October that their content should be discontinued. The newspaper also informs that it had negotiations with the start up to enter into a licensing agreement, as it has done with other tech firms. Nevertheless, the court case claims that Perplexity still ignored these requests and proceeded to scrape the Times site.

Another allegation of Perplexity in the complaint relates to the fact that the technical barriers called robots.txt files are disregarded by Perplexity. They are ordinary digital commands that the owners of the websites employ to direct automated bots about the sections of a site they can access, and which ones they can not. The Times accuses Perplexity of having their web crawlers on ignoring these instructions and reaching and indexing what was specifically declared as off-limits. This is what is outlined in the suit as an intentional breach of the terms of service and security provisions of the site.

Perplexity has apparently neglected the rights of content creators by overlooking the technical and legal alerts. The Times claims that the growth strategy of the startup is premised on the assumption that one should ask forgiveness, not permission. This combative strategy has enabled Perplexity to expand at a high growth rate, but it has since put them in the sights of one of the largest media companies in the world. The court will be forced to determine whether there are legal implications of disregarding these digital no trespassing signs.

The Defense of Perplexity and the argument of Innovation.

Perplexity AI has reacted to the lawsuit through the typical defense of tech disruptors. One of the company representatives, Jesse Dwyer, condemned the legal action as a strategy to delay innovation. The company makes the claim that their technology is a search engine that indexes information to give factual citations and not a plagiarism tool. According to them, they are only trying to obtain the world information in order and make it available just like libraries or the old fashioned search engines have been doing over the decades.