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Reddit Caught an AI Company Stealing—And It's About to Get Expensive

Yesterday, Reddit sued Perplexity AI for what it's calling "data laundering." The same day, OpenAI announced a $15 billion data center in Wisconsin. These stories are connected in a way that reveals the entire AI economy's dirty secret.

Let's start with the heist.

The Sting Operation

Reddit set a trap. They created a test post that only Google's crawler could access—nowhere else on the internet. Within hours, Perplexity's AI was spitting out that exact content in response to queries.

"The only way that Perplexity could have obtained that Reddit content is if it and/or its co-defendants scraped Google [search results] for that Reddit content," the lawsuit states. Caught red-handed.

Here's the kicker: Reddit had already sent Perplexity a cease-and-desist letter in May 2024. Perplexity responded claiming they'd respect Reddit's robots.txt file and weren't using Reddit for training. What happened next? Citations to Reddit on Perplexity's platform increased 40-fold.

That's not compliance. That's a middle finger.

Data Laundering: The New Crime

Reddit isn't just suing Perplexity. They're going after the entire supply chain—three data-scraping companies that form what Reddit calls the "data laundering" economy:

• Oxylabs: A Lithuanian scraping operation

• AWMProxy: What Reddit describes as a "former Russian botnet"

• SerpApi: A Texas startup that scrapes Google search results in real-time

The scheme works like this: These companies can't scrape Reddit directly because Reddit blocks them. So they scrape Google search results instead, extracting Reddit content that Google has indexed. Then they sell that "laundered" data to AI companies like Perplexity.

Reddit's chief legal officer Ben Lee puts it perfectly: They're "would-be bank robbers" who, unable to access the vault, break into the armored truck instead.

Why This Actually Matters

Perplexity is valued at $20 billion. They raised $200 million in September 2025 at that valuation, up from $500 million at the start of 2024. Their annual recurring revenue hit $150 million—quadrupling in a year.

And according to Reddit's lawsuit, "Perplexity's business model is effectively to take Reddit's content from Google search results, feed them into a third party's LLM, and call it a new product."

That $20 billion valuation? It's built on stolen content.

Meanwhile, the companies who play by the rules are paying massive fees. Google signed a $60 million per year deal with Reddit in February 2024. OpenAI's paying an estimated $70 million. These licensing agreements make up 10% of Reddit's revenue.

So you've got two tiers: the companies paying tens of millions annually for legitimate access, and the ones scraping it for free while their valuations explode.

The AI Data Crisis

Here's what's actually happening in AI right now: Every company is locked in an arms race for quality training data. And they're running out.

Reddit is valuable because it's authentic human conversation—real people with genuine opinions, organized by topic, ranked by humans rather than algorithms. That's gold for AI training. Reddit went public at a $6.4 billion valuation specifically because of this data goldmine.

But Perplexity isn't alone in getting sued. The list of their legal troubles is growing:

• Dow Jones and NYP Holdings sued them in October 2024 for scraping The Wall Street Journal and New York Post

• The New York Times sent a cease-and-desist in October 2024

• The BBC threatened legal action in June 2025

• Forbes and Wired have accused them of plagiarism

A Copyleaks analysis found Perplexity paraphrased 48% of sample articles. In one case, they plagiarized 7% of content directly.

And Reddit already sued Anthropic (maker of Claude) in June 2025 for the same thing. That case has a hearing scheduled for January 2026.

The Infrastructure Irony

Here's where it gets interesting. The same day Reddit filed this lawsuit, OpenAI announced the Lighthouse campus in Wisconsin—a $15 billion data center providing close to a gigawatt of AI capacity, scheduled for completion in 2028.

This is part of the Stargate Project: a $500 billion, four-year plan to build 10 gigawatts of AI data center capacity. For context, that's enough to power 7.5 million homes. OpenAI will run over 2 million chips across this infrastructure.

Think about the asymmetry here. OpenAI and its partners are willing to drop $500 billion on physical infrastructure. They'll build entire campuses, create thousands of jobs, develop zero-emission energy sources.

But paying content creators for their data? That's where companies suddenly get creative with "data laundering" schemes and scrapers disguised as legitimate indexing.

What Perplexity Says

Perplexity's defense is predictable: "We will always fight vigorously for users' rights to freely and fairly access public knowledge." They claim they're not scraping for training but "indexing web pages and surfacing factual content" with citations.

They argue "no single organization owns the copyright over facts."

Technically true. But completely missing the point.

Reddit isn't claiming copyright over facts. They're claiming that circumventing their technical protections, ignoring their robots.txt file, and building a $20 billion business on their content without compensation is theft—regardless of whether individual facts are copyrightable.

The Real Question

The Reddit lawsuit is asking something fundamental: If you're willing to spend $500 billion on infrastructure, why aren't you willing to pay for the data that makes that infrastructure valuable?

Reddit spent "tens of millions of dollars" on anti-scraping technology. They've established clear licensing terms. They've built legitimate relationships with major AI companies. And Perplexity allegedly looked at all that and decided the scrapers and bots were a better deal.

That's not innovation. That's just theft with a fancy valuation.

Major News Outlet Coverage

1. Reuters – Reddit sues Perplexity for scraping data to train AI system
   https://www.reuters.com/world/reddit-sues-perplexity-scraping-data-train-ai-system-2025-10-22/​

2. Associated Press (AP News) – Reddit sues Perplexity, others for user comment scraping
   https://apnews.com/article/reddit-perplexity-ai-copyright-scraping-lawsuit-3ad8968550dd7e11bcd285a74fb6e2ff​

3. Bloomberg – Reddit Sues Perplexity, Others Over Alleged Data Scraping
   https://www.bloomberg.com/news/articles/2025-10-22/reddit-sues-perplexity-others-over-alleged-data-scraping​

4. The New York Times – Reddit Accuses ‘Data Scraper’ Companies of Theft
   https://www.nytimes.com/2025/10/22/technology/reddit-data-scrapers-perplexity-theft.html​

5. PBS NewsHour – Reddit sues AI company over alleged ‘industrial‑scale’ scraping of its users’ comments
   https://www.pbs.org/newshour/nation/reddit-sues-ai-company-over-alleged-industrial-scale-scraping-of-its-users-comments​

Business and Tech Publications

6. Business Insider – Reddit lawsuit accuses Perplexity AI firms of stealing data from Google results
   https://www.businessinsider.com/reddit-lawsuit-perplexity-ai-firms-data-scrapers-scraping-google-2025-10​

7. Financial Post – Reddit sues AI company Perplexity and others for ‘industrial‑scale’ scraping of user comments
   https://business.financialpost.com/pmn/reddit-sues-ai-company-perplexity-and-others-for-industrial-scale-scraping-of-user-comments​

8. Yahoo News Canada – Reddit Sues Perplexity, Other AI Companies for Scraping User Comments
   https://ca.news.yahoo.com/reddit-sues-perplexity-other-ai-230650694.html​

9. Search Engine Land – Reddit sues Perplexity, SerpApi over scraping Google
   https://searchengineland.com/reddit-sues-perplexity-serpapi-scraping-google-463681​

10. Axios – Reddit sues Perplexity and data scraping firms
    https://www.axios.com/2025/10/22/reddit-suing-perplexity-data-scraping​

Additional and Regional Coverage

11. ABC News (Technology Wire) – Reddit sues over ‘industrial‑scale’ scraping of user comments
    https://abcnews.go.com/Technology/wireStory/reddit-sues-ai-company-perplexity-industrial-scale-scraping-126768844​

12. Halifax City News – Reddit sues AI company Perplexity and others for ‘industrial‑scale’ scraping of user comments
    https://halifax.citynews.ca/2025/10/22/reddit-sues-ai-company-perplexity-and-others-for-industrial-scale-scraping-of-user-comments​

13. A.V. Club – Reddit files lawsuit against Perplexity AI
    https://www.avclub.com/reddit-lawsuit-perplexity-data-scrapers​

14. CTV News (Associated Press syndication) – Reddit sues AI company Perplexity and others for ‘industrial‑scale’ scraping of user comments
    https://www.ctvnews.ca/business/article/reddit-sues-ai-company-perplexity-and-others-for-industrial-scale-scraping-of-user-comments/​

These URLs collectively document the key filings, allegations, and legal framing of Reddit Inc. v. Perplexity AI Inc. et al., filed October 22, 2025, in the Southern District of New York.