Perplexity Wants Its Next Stage of Growth, Legal Troubles Be Damned

High-flying AI startup Perplexity is looking for a few hundred million more dollars to scale its burgeoning business — oh, and maybe cover some pesky legal fees, too.

According to a Wall Street Journal report, the company, which has launched an artificial intelligence-powered search engine, is in talks for a massive new funding round that could double its multibillion-dollar valuation. But on Monday, WSJ parent organization Dow Jones and the New York Post — all properties in Rupert Murdoch’s News Corp empire — filed a lawsuit against Perplexity alleging widespread copyright infringement.

Copy That

Perplexity’s AI-powered search engine (which one reporter from The Verge characterized as an “answer engine”) has developed a bad reputation for generating responses to user prompts that appear concerningly familiar to publishers, who are worried that the AI’s allegedly copied-and-pasted text is siphoning important click-traffic. Forbes accused it of plagiarism in June; Condé Nast sent a cease-and-desist letter in July, as did The New York Times earlier this month. 

A Wired investigation this summer found that Perplexity is ignoring widely-accepted web standards to bypass paywalls and hoover up data from websites that were designed to avoid bots’ scraping. Both Amazon and Reddit have also accused the company of scraping abuse. News Corp’s lawsuit cites instances of Perplexity generating verbatim plagiarism before veering off into so-called AI hallucinations.

But all that bad press — yes, often from the very press it’s allegedly wronged — hasn’t stopped Perplexity, which has roughly 10 million monthly users, from riding the AI hype wave:

• Perplexity has told investors it is looking to raise $500 million in its latest round, sources told the WSJ, at a whopping valuation of $8 billion.
• The company has already raised three funding rounds in the past year: in January at a $520 million valuation, in April at a $1 billion valuation, and in August at a $3 billion valuation. Its annualized revenue, mostly from selling premium subscriptions, is around $50 million, sources told the WSJ.

Special Agent: Microsoft also announced Monday that next month it will launch new no-code tools to allow organizations to build their own specialized AI agents, which can do things like sift through and draft emails. The move comes after Salesforce launched similar tools in September. The takeaway: Everyone hates managing their emails.