The battle over content usage in the era of generative AI continues, with the New York Times taking direct aim at the AI-powered search startup, Perplexity. On Tuesday, per to a report in the Wall Street Journal, the Times issued a cease-and-desist notice, demanding that the Bezos-backed company stop accessing and utilizing its content for AI-generated summaries. According to the letter, reviewed by The Wall Street Journal, Perplexity has allegedly violated the newspaper’s rights under copyright law.

Perplexity, which launched two years ago, has positioned itself as an emerging challenger to search giants like Google, offering users AI-generated summaries with selected sources and links. Despite the demand from the New York Times, Perplexity CEO Aravind Srinivas stated, “We are very much interested in working with every single publisher, including the New York Times. We have no interest in being anyone’s antagonist here.”

Tune in for the New York Times vs. Perplexity AI clash!

The Stakes for Publishers

The clash between Perplexity and the Times is not an isolated incident. Generative AI technologies are reshaping the landscape for media and content-driven industries, prompting publishers to recalibrate their strategies in the face of rapid advancements. News outlets, long reliant on advertising and subscription revenue, see both promise and peril in AI. The technology’s ability to analyze data and create content at scale offers efficiency, but it also introduces new risks of misuse and content theft.

The Times has been proactive in protecting its content, and this isn’t the first time it has taken legal action to curb AI firms from exploiting its journalism. The publisher has also filed a lawsuit against OpenAI, the creator of ChatGPT, for alleged copyright infringement. “Perplexity and its business partners have been unjustly enriched by using, without authorization, The Times’s expressive, carefully written and researched, and edited journalism without a license,” the Times wrote in its notice to Perplexity.

The Current Lawsuit Against OpenAI

The New York Times’ legal action against OpenAI further highlights the intensifying struggle between publishers and AI companies over content rights. The lawsuit, filed late last year, accuses OpenAI of using millions of the Times’ articles without permission to train its language models, including ChatGPT. The Times claims that OpenAI’s actions constitute copyright infringement, as its chatbot generates summaries and responses based on the expressive content of the Times’ journalism.

OpenAI, for its part, has denied any wrongdoing, arguing that the data used in training ChatGPT falls under fair use, a defense often invoked by AI companies. The company also contends that some of the Times’ tests in support of the lawsuit were specifically designed to provoke outputs resembling original articles, which OpenAI claims were not representative of typical chatbot responses.

The implications of this lawsuit extend beyond just OpenAI and the Times. If successful, it could set a precedent for how AI companies can legally access and use publisher content, shaping the future of generative AI models and the scope of fair use. This legal battle underscores the broader concerns that media companies have about AI scraping and summarizing their work without appropriate compensation or licensing agreements.

The lawsuit against OpenAI shares many parallels with the current demands made to Perplexity, as both companies have been accused of unauthorized use of copyrighted content. As the generative AI landscape evolves, the outcomes of these legal actions could have significant ramifications for the boundaries between content ownership and technological innovation.

Perplexity’s Response

Perplexity has reportedly assured the Times in the past that it would stop using crawling technology that circumvents website restrictions, but the Times asserts that the company’s assurances have not been honored. The Times asked Perplexity to provide detailed information on how it has been accessing the publisher’s website despite the Times’s preventative measures.

In response, Srinivas emphasized that Perplexity “isn’t ignoring the Times’s efforts to block crawling of its site.” He added that the company plans to address the issues raised in the legal notice by the October 30 deadline. Perplexity has previously struck a handful of deals with publishers, though media companies have described the startup’s terms as less favorable compared to the lucrative licensing agreements that others, like OpenAI, have offered.

Perplexity’s Challenge to Google

Perplexity is backed by Jeff Bezos, and while the company is still a small player compared to Google, it has ambitious plans. In September, Perplexity reported processing 340 million searches, a tiny fraction of Google’s volume but still indicative of growing interest. Perplexity plans to introduce ads under its AI-generated responses later this month, with the company pledging to share up to 25% of the ad revenue with publishing partners whose content it utilizes.

The use of AI-generated search summaries is becoming an increasingly sensitive issue, as traditional publishers worry that users who find information from AI summaries may no longer click through to the full articles. Perplexity is sending some traffic to publishers’ sites, but the volume is still relatively small. According to data from digital measurement firm Similarweb, referrals from Perplexity to the Times’s website increased eightfold over the year ending in August 2024, but they remain a fraction of the traffic driven by Google.

Broader Concerns Across Media

The New York Times is not alone in raising concerns about Perplexity’s practices. Other major media companies, including Forbes and Condé Nast, have accused Perplexity of using their content without permission. Forbes alleged that Perplexity used its content to create stories “extremely similar” to the original reporting. “Any unauthorized use of Forbes’ Intellectual Property is a violation of Forbes’ intellectual property rights, depriving Forbes of those rights and threatening its reputation and goodwill,” Forbes wrote in a notice to Perplexity.

These grievances are part of a larger conversation within the media industry regarding the balance between AI innovation and intellectual property protection. Some publishers have opted to sign licensing deals with AI companies—OpenAI has agreements with media organizations such as News Corp (the parent of The Wall Street Journal), Dotdash Meredith, and Politico owner Axel Springer—that compensate them for the use of their content.

The Complex Dynamics of AI Content Usage

The Times and other publishers have long taken steps to block AI firms from scraping their content without permission. One of the key measures used is the inclusion of specific code in websites that indicates their content should not be scraped, but enforcement remains a challenge. As Perplexity and similar startups continue to gain traction, media companies face the ongoing task of safeguarding their content.

While Perplexity is attempting to carve out its own niche in the competitive search market, the startup is walking a fine line. Its current valuation stands at approximately $1 billion, following a new funding deal earlier this year. Most of its revenue currently comes from a subscription offering priced at $20 per month, which provides users access to more advanced AI capabilities. However, monetizing its AI-generated search through ads—and sharing that revenue with publishers—is a crucial part of its strategy going forward.

A Legal Landscape in Flux

The ongoing disputes between Perplexity, the New York Times, and other publishers highlight the unsettled nature of the legal framework surrounding generative AI. While Perplexity has positioned itself as willing to collaborate with publishers, the path to mutually beneficial agreements is far from straightforward. As Srinivas put it, “We are not interested in being anyone’s antagonist here.” Nevertheless, the tensions around content scraping and copyright issues suggest that the broader fight over content usage by AI is only beginning.

Publishers are finding themselves in a challenging position—embracing technological advancements while safeguarding their core assets. As more media companies weigh legal actions, partnerships, or licensing deals, the industry is grappling with how best to coexist with generative AI firms in a way that preserves both innovation and the value of journalistic content.

The next few months may prove pivotal as Perplexity responds to the Times’s cease-and-desist notice and as other publishers decide whether to follow a similar course. The questions raised by the use of AI in news search—including how to protect original content and fairly compensate creators—remain unresolved, and how these issues play out could define the future relationship between media and artificial intelligence.