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What to know about Perplexity, the buzzy — and controversial — AI startup targeting a big funding round

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What to know about Perplexity, the buzzy — and controversial — AI startup targeting a big funding round

  • News Corp. has accused AI startup Perplexity of copyright infringement in a new lawsuit.
  • Perplexity is eyeing a massive funding round this year, The Wall Street Journal had reported.
  • Here’s what you need to know about the buzzy, controversial company.

Perplexity, the hot AI startup aiming to compete with Google that has earned the ire of several prominent media organizations, is eyeing a massive funding round — which could mark its fourth raise this year.

The AI-fueled search engine is in talks to raise $500 million at an $8 billion valuation, The Wall Street Journal reported on Sunday, a big jump from the company’s $3 billion valuation this summer.

Perplexity has been raising buckets of cash while it clashes with top publications, which have accused the company of improperly accessing and using their content.

On Monday, the Journal and New York Post filed a lawsuit against the company, becoming the latest to level accusations against Perplexity and highlighting the ongoing tensions as media companies grapple with AI’s ascent.

Perplexity did not immediately respond to a request for comment from Business Insider.

Here’s everything you need to know about the company’s rise and the allegations it’s facing.

Big-name investors

Perplexity was cofounded in 2022 by Aravind Srinivas, Denis Yarats, Johnny Ho, and Andy Konwinski. Srinivas — a former research scientist at OpenAI — serves as its chief executive.

Perplexity is an AI-fueled search engine that monetizes by selling subscriptions; it will soon start selling ads, according to The Journal. The company has annualized revenue of $50 million, according to The Journal, and fields 15 million searches every day.

Perplexity has attracted the backing of tech mogul Jeff Bezos as well as multitrillion-dollar chip firm Nvidia.

In January, the company raised roughly $74 million at a $520 million valuation; by its next funding round in the spring, the company was valued at $1 billion and later valued at $3 billion after SoftBank’s Vision Fund 2 invested.

Allegations of ‘ripping off’ news outlets

Perplexity has clashed in recent months with a number of media organizations, including Forbes and Wired.

In June, Forbes’ executive editor accused Perplexity of “ripping off” an investigation without proper attribution.

Srinivas said he agreed the sourcing should’ve been more prominent.

That same month, Wired made similar claims in an investigation that found Perplexity summarized certain articles inaccurately and without attribution. It also alleged Perplexity was likely scraping content that websites had intended to be off limits.

Perplexity pushed back in a statement to the outlet, though Wired reported that it didn’t deny the allegations.

“The questions from WIRED reflect a deep and fundamental misunderstanding of how Perplexity and the internet work,” Srinivas told Wired.

Legal trouble from The New York Times and News Corp.

Perplexity has more recently found itself in the legal crosshairs of The New York Times and News Corp.

Last week, the Times — which previously sued OpenAI and Microsoft — sent Perplexity a cease-and-desist letter demanding it stop using Times content in its results, Reuters reported.

The Times alleged that Perplexity was violating copyright laws by using its content to create news summaries, according to Reuters.

In a statement to Reuters, Srinivas said: “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.”

On Monday, the Journal and New York Post owner News Corp. filed a lawsuit against Perplexity, also alleging copyright infringement.

“This suit is brought by news publishers who seek redress for Perplexity’s brazen scheme to compete for readers while simultaneously freeriding on the valuable content the publishers produce,” the lawsuit states.

The lawsuit alleges Perplexity built its user base “through theft of a massive volume of copyrighted material” and threatened a “reckoning” for the company in court.

While Perplexity has dealt with criticism from media outlets, its rival OpenAI has struck deals with publishers to use their content.

In May, OpenAI announced a multi-year deal with News Corp. to give the AI firm access to content from the conglomerate’s media properties.

That deal came months after OpenAI and Axel Springer unveiled a multi-year content licensing deal that gives ChatGPT access to select content from Axel Springer publications — including Politico, Business Insider, and European properties like BILD and WELT.

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