Social media platform Reddit (RDDT) filed a lawsuit against Perplexity AI and three other companies, accusing them of taking data from the platform without permission. The legal action highlights growing tensions between content owners and AI firms, as Reddit moves to protect its vast data trove. RDDT stock dropped more than 4% on Wednesday, slipping an additional 0.5% in after-hours trading.
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Reddit Strikes Back
Reddit alleges that the data-scraping companies bypassed its security measures to take content that Perplexity urgently needs to power its AI “answer engine” system.
According to a complaint filed Wednesday in Manhattan federal court, three data-scraping companies—Oxylabs UAB, AWMProxy, and SerpApi—have been gathering Reddit data through Google (GOOGL) search results to resell it. The lawsuit claims that Perplexity purchased data from at least one of these companies. Under this lawsuit, Reddit is asking for financial compensation, a permanent court order, and a ban on using or selling the scraped data.
The Fight for AI Data Heats Up
This lawsuit is part of a growing wave of cases from content owners claiming that tech firms are misusing copyrighted material to train AI systems. Notably, Reddit has agreements with OpenAI (PC:OPAIQ) and Google (GOOGL) to license its data for AI training, but it is suing other companies it believes are using the data without permission. In June, Reddit filed a similar suit against AI startup Anthropic, which is still ongoing.
These cases also highlight the rising importance and value of original user data, which remains a key asset in the fast-growing AI industry.
Is Reddit a Good Stock Buy?
Turning to Wall Street, the analysts’ consensus rating for RDDT stock is Moderate Buy, based on 16 Buys and eight Holds assigned over the past three months. At $237.66, the average stock price target for Reddit implies over 20% upside from the current level.
