American newspaper giant The New York Times (NYT) has finally run out of patience with artificial intelligence startup Perplexity AI (PC:PERPL).
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On Friday, the media company dragged Perplexity AI, which is backed by AI chip leader Nvidia (NVDA), to court over claims the AI firm illegally used millions of its articles in training the startup’s AI models. The lawsuit comes over a year after The New York Times sent a court letter to Perplexity, asking it to desist from the practice of using its content for its AI models.
Publishers Flag Illegal Content Use by AI Startups
Like rival OpenAI (PC:OPAIQ) — which has also been sued by the New York Times — Perplexity AI has been a target of lawsuits from multiple publishers accusing the startup of using their content in AI model training without permission. For instance, Perplexity AI is one of four entities sued by social media platform Reddit (RDDT) in October. Reddit claimed these entities scraped its data via Google (GOOGL) search results without permission.
Earlier in June, the UK’s national broadcaster BBC also threatened to sue Perplexity AI over similar claims, joining business and technology outlet Forbes and Vogue magazine publisher Condé Nast, both of which raised similar claims last year.
What Has PerplexityAI Said?
Responding to the New York Times last year, Perplexity AI argued that it only engages in “indexing web pages and surfacing factual content as citations to inform responses when a user asks a question.” The startup further contended that “the law recognizes that no one organization owns the copyright over facts.”
However, Perplexity AI in June entered a strategic deal with Gannett (GCI) to license content from USA Today and over 200 publications across the U.S. that are part of the USA Today Network.
New York Times Continues to Grow Digital Subscriber Base
The New York Times’s lawsuit comes as the media giant — which is one of a few that has managed to make a business turnaround amid dwindling ad revenue for traditional publishers — continues to expand its digital subscriber base.
In June, Amazon (AMZN) agreed to pay the newspaper company about $20 to $25 million annually to license a broad range of its content to train its AI models and feed its digital assistant Alexa.
Can You Invest in the New York Times?
On Wall Street, The New York Times’ shares currently hold a Moderate Buy consensus rating. This is based on four Buys and two Holds assigned by analysts over the past three months.
At $66.83, the average NYT price target implies approximately 4% upside from the current trading levels.
