Reddit sues Perplexity for scraping of posts, expanding user data battle with AI industry

In a significant move, Reddit has filed a lawsuit against the AI company Perplexity, claiming it unlawfully harvested user posts to enhance its AI model. This legal action, initiated in a New York federal court, highlights the intensifying conflict between content creators and the artificial intelligence sector. The lawsuit also implicates three other entities, which Reddit accuses of facilitating Perplexity's data acquisition. These include the Lithuanian data-scraping firm Oxylabs, the former Russian botnet AWMProxy, and Texas-based startup SerpApi. Reddit alleges that these parties employed deceptive tactics, such as concealing their identities and locations, to extract copyrighted material from its platform. Perplexity, known for its AI-driven search engine, has refuted the claims, labeling them as extortionate and asserting that Reddit is resistant to an open internet. SerpApi echoed this sentiment, expressing strong disagreement with Reddit’s allegations and confirming its intention to mount a defense in court. This lawsuit is part of a broader trend where content owners are pursuing legal action against AI firms for utilizing copyrighted content without consent to train their large language models. Reddit has been actively involved in this legal landscape, having previously initiated a similar lawsuit against the AI startup Anthropic earlier this year. Reddit's Chief Legal Officer, Ben Lee, commented on the situation, stating that AI companies are engaged in a fierce competition for quality human-generated content. He described this environment as fostering an 'industrial-scale data laundering economy,' where scrapers circumvent protections to illegally procure data, later selling it to clients in need of training resources. With over 100,000 active subreddit communities, Reddit's extensive repository of moderated discussions has become a prominent source for AI-generated content. The platform remarked that its user posts have increasingly been referenced in AI-generated responses on Perplexity. Following a cease-and-desist letter sent to Perplexity, Reddit claims there was a dramatic increase in citations of its content. In response to the lawsuit, Perplexity contended that it does not utilize Reddit's content for training AI models but simply summarizes and references public discussions on the platform. They argue that this stance renders licensing agreements unnecessary. A representative from Perplexity criticized Reddit’s demands for payment, asserting that their operations comply with legal standards. The ongoing legal battle underscores the growing significance of data licensing in the business strategies of social media companies. In a recent statement, Reddit’s COO revealed that AI licensing deals with major players like Google and OpenAI account for a substantial portion of the platform's revenue, emphasizing the financial stakes involved in this contentious issue.