Perplexity fires back at Reddit's lawsuit, denies ‘data theft’ allegations amid scrutiny of AI scraping practices

Perplexity, an Artificial Intelligence (AI) company, has denied allegations of ‘data theft’ after Reddit filed a lawsuit on Wednesday, 22 October, in a New York Federal Court. The case names Perplexity, founded by Aravind Srinivas, along with three other entities accused of scraping Reddit user comments for commercial gain.

The social media platform Reddit described the alleged activity as an “industrial-scale, unlawful” scheme, and claimed it extracted millions of Reddit user comments without permission for commercial gain, Associated Press reported.

Perplexity's defence

Perplexity has described the lawsuit as a “sad example” of the risks that arise when public data forms a big part of a public company’s business model. Chatbots such as Perplexity, ChatGPT and Gemini are AI-powered platforms that allow users to access information and generate content.

Perplexity, which operates an AI-powered ‘answer engine’, immediately went on a defensive mode, claiming Reddit's legal action a “show of force in Reddit’s training data negotiations with Google and OpenAI,” emphasising that Perplexity doesn’t train foundation models.

In a public statement, Perplexity addressed the core allegation that it ignored Reddit's licensing requests. The company stated this was “untrue,” explaining that as an “application-layer company,” it is impossible for them to sign a license agreement for training models on content, as they do not perform that function.

The company further alleges that Reddit insisted that they should pay anyway, despite lawfully accessing Reddit data, which Perplexity refused, calling it “strong-arm tactics.”

“In any case, we won’t be extorted, and we won’t help Reddit extort Google, even if they’re our (huge) competitor. Perplexity will play fair, but we won’t cave. And we won’t let bigger companies use us in shell games,” Perplexity wrote in the post.

Perplexity maintains that its use of Reddit content is limited to summarising discussions and citing Reddit threads, a practice it claims is essential for users to verify the accuracy of the AI-generated answers.

Heart of the dispute

The lawsuit by Reddit specifically targets the infrastructure the AI industry uses to acquire training data. In addition to Perplexity, the lawsuit also names Lithuanian data-scraping company Oxylabs UAB, a web domain called AWMProxy, and Texas-based startup SerpApi, which lists Perplexity as a customer on its website, AP reported.

This is Reddit's second such lawsuit, following an action against another major AI company, Anthropic, in June. However, the lawsuit filed on Wednesday is different in the way that it confronts not just an AI company but the lesser-known services the AI industry relies on to acquire online writings needed to train AI chatbots, the news agency stated.

Reddit has previously signed licensing agreements with Google, OpenAI and other companies, allowing them to train their AI systems on its user-generated content.

These licensing deals had become an increasingly important revenue stream for Reddit, especially in the lead-up to its public debut on Wall Street last year.

Perplexity noted that model makers are cutting back on deals with Reddit or walking away completely, citing recent earnings reports.