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BBC Threatens Legal Action Against AI Startup Perplexity Over Content Scraping, FT Reports

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The BBC has threatened to take legal action against AI startup Perplexity, accusing the company of using BBC content to train its “default AI model,” according to the Financial Times report on Friday. This marks the British broadcaster as the latest news organization to allege content scraping by the AI firm.

The BBC may seek an injunction unless Perplexity stops scraping its content, deletes any existing copies used for AI training, and submits “a proposal for financial compensation” to address the alleged misuse of its intellectual property, the FT said, citing a letter sent to Perplexity CEO Aravind Srinivas.

The broadcaster confirmed the report in a statement to Reuters.

Perplexity has faced similar accusations from other media outlets including Forbes and Wired for plagiarizing their content. In response, the startup has launched a revenue-sharing program aimed at addressing publishers’ concerns.

In October last year, the New York Times sent Perplexity a “cease and desist” letter demanding the company stop using its content for generative AI.

Since the rise of ChatGPT, publishers have expressed concerns about AI chatbots combing the internet to extract information and generate summarized content for users.

According to the FT report, the BBC said parts of its content were reproduced verbatim by Perplexity, and links to the BBC website have appeared in the AI startup’s search results.

Perplexity described the BBC’s claims as “manipulative and opportunistic,” stating that the broadcaster has “a fundamental misunderstanding of technology, the internet and intellectual property law,” in a statement to Reuters.

Perplexity’s service provides information by searching the internet, similar to ChatGPT and Google’s Gemini. The startup is backed by notable investors including Amazon founder Jeff Bezos, AI leader Nvidia, and Japan’s SoftBank Group.

The Wall Street Journal reported last month that Perplexity is in advanced talks to raise $500 million in a funding round that would value the company at $14 billion.

Kadokawa Shares Fall as Sony Announces Investment, Not Acquisition

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Shares of Japan’s Kadokawa, a media conglomerate known for its role in creating the hit game “Elden Ring,” plummeted by their daily limit on Friday after the company announced a capital partnership with Sony Group instead of the expected full acquisition. The two companies revealed that Sony would invest approximately 50 billion yen ($317 million) in Kadokawa by acquiring a 10% stake through a new share issuance.

Stock Impact

Kadokawa’s stock fell sharply by 15.95% on Friday, ending the day at 3,689 yen, the daily limit, as sell orders overwhelmed the market. This comes after a surge of about 45% in Kadokawa’s stock price over the past month, fueled by reports of potential acquisition talks with Sony. Analysts pointed out that investors had expected a premium offer through a tender bid, which did not materialize, contributing to the sharp drop in Kadokawa’s share price.

Market Reaction

The investment from Sony, while making it the largest shareholder in Kadokawa, was seen as a disappointment by some market participants, especially given that the sale price of 4,146 yen per share was a discount of more than 5% compared to Kadokawa’s closing price the day before. Analysts like Shunki Nakamura from Jefferies also noted that the move would be dilutive due to the new share issuance.

Strategic Goals

The deal between Sony and Kadokawa is aimed at enhancing Sony’s position in the growing anime market, with Kadokawa’s publishing business playing a key role in the creation and distribution of anime content. However, while the partnership stops short of a full acquisition, there is potential for increased collaboration and future moves toward a larger stake in Kadokawa, according to analysts.

Sony’s Position

Despite the negative reaction in Kadokawa’s stock, Sony’s shares rose by 2% in the morning and ended the day with a modest 0.7% gain. Traders noted that this more limited partnership with Kadokawa would free up Sony to allocate capital to other projects.

 

Sony Rules Out Renewing Offer for Paramount, Citing Strategic Misalignment

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Sony has officially withdrawn from the bidding war for Paramount Global, stating that acquiring the company would not align with its strategic goals. Hiroki Totoki, Sony‘s Chief Financial Officer, confirmed the decision during the company’s first-quarter earnings presentation, stating that a full acquisition of Paramount would pose significant risks due to potential misalignment with Sony‘s capital allocation structure.

This decision comes after reports from the Japanese financial newspaper Nikkei, indicating Sony‘s withdrawal following Skydance Media‘s successful acquisition of Paramount Global. Skydance, along with partners RedBird Capital Partners and KKR, invested over 2.4 billion.

Sony and private equity firm Apollo Global Management had previously expressed interest in acquiring Paramount for approximately $26 billion. However, Sony‘s revised stance reflects a shift in strategy, potentially influenced by the company’s 7% profit decline in fiscal 2023, attributed to weakness in its financial services division.

The deal marks the end of the Redstone family’s long-standing control over Paramount. Sumner Redstone, the media mogul, acquired Paramount in 1994, and his daughter Shari Redstone has led the company since his passing in 2020.