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The AI chatbot Perplexity is currently facing a lawsuit involving two well-established titans of knowledge sharing: Encyclopedia Britannica and Merriam-Webster.
The former have taken legal action against Perplexity for copyright and trademark violations. They claim that the AI software has negatively impacted their revenue by redirecting web traffic from their sites.
Britannica and Merriam-Webster argued that Perplexity has been reproducing their material without permission, breaching their copyrights.
The legal action was submitted in a federal court in New York. It claims that Perplexity’s AI tool “takes advantage” of the content from these credible sources, diverting web traffic from their websites. Britannica and Merriam-Webster depend on website visitors to sell subscriptions and earn advertising income. Hence, changes in traffic is claimed to negatively impact their business model.
Nowadays, with AI, we can get web searches in real-time by clicking a single button on our device. Consequently, we no longer have access to the source website. That saves our time, but it does not acknowledge the information providers.
Generative AI tools like Perplexity chatbot and OpenAI’s ChatGPT frequently scrape content to train their models. Still, Perplexity’s approach of sourcing data in real time for immediate user responses causes concern, as it avoids directly accessing content creators’ websites.
Broadening the Legal Framework of Generative AI
Perplexity’s legal action is among numerous class action lawsuits targeting generative AI companies. In 2024, media giant News Corp filed a lawsuit against Perplexity for purportedly violating Dow Jones and The New York Post articles by utilising them without authorisation.
Many AI companies, such as Perplexity, are experimenting with revenue-sharing agreements with publishers to address these challenges.
Last month, Perplexity launched a program to compensate publishers whenever their content is used to create AI replies. This initiative is part of a broader movement within the AI industry to establish a fairer and more sustainable business model that compensates content creators for their contributions to AI systems.
AI “Hallucinations” and Trademark Concerns
In addition to copyright violations, Britannica and Merriam-Webster are also wary of the “hallucinations” that AI programs like Perplexity often create. These AI tools occasionally provide inaccurate or erroneous information, and in this context, some errors have been linked to content from Britannica and Merriam-Webster.
Image credit: Britannica
Both objected to the “improper use” of their content. They said it constitutes a copyright and trademark violation. Also, they said the hallucinations could harm their reputations.
The lawsuit seeks monetary compensation, but the specific amount has not been disclosed. The lawsuit comes as generative AI companies face increasing scrutiny regarding their reliance on third-party content to fuel their models.
At the beginning of this month, PayPal partnered with Perplexity to introduce AI tools and various rewards for PayPal and Venmo users. A unique benefit is complimentary entry to Perplexity’s Comet AI browser.
