Reddit sues Perplexity over alleged ‘data laundering’ scheme to scrape user posts

Reddit filed a federal lawsuit Wednesday against artificial intelligence (AI) startup Perplexity and three data-scraping companies, alleging they orchestrated a scheme to steal millions of user posts through an underground “data laundering” economy.

The complaint, filed in Manhattan federal court on October 22, 2025, names Perplexity AI alongside Lithuania-based Oxylabs UAB, Texas startup SerpApi, and AWMProxy—a web domain Reddit describes as a former Russian botnet. Reddit claims these companies worked together to bypass security measures and scrape copyrighted content that Perplexity “desperately needs” for its AI-powered answer engine.

“AI companies are locked in an arms race for quality human content, and that pressure has fueled an industrial-scale ‘data laundering’ economy,” said Ben Lee, Reddit’s chief legal officer. He explained that scrapers steal data by masking their identities and disguising automated tools as regular users, then sell it to AI companies hungry for training material.

The lawsuit claims the data-scraping firms evaded two layers of protection. First, they bypassed Reddit’s own anti-scraping systems. Then they circumvented Google’s controls to extract Reddit content directly from search engine results.

Reddit sent Perplexity a cease-and-desist letter in May 2024. According to the complaint, Perplexity responded by increasing citations to Reddit “forty-fold.”

Perplexity denied the allegations in a statement posted on Reddit itself. The company called the lawsuit “a sad example of what happens when public data becomes a big part of a public company’s business model.”

“Reddit thinks that’s their right,” Perplexity wrote. “But it is the opposite of an open internet.”

SerpApi spokesperson Ryan Schafer said his company “strongly disagrees with Reddit’s allegations and intends to vigorously defend ourselves in court.”

Denas Grybauskas, chief governance officer at Oxylabs, pushed back against Reddit’s claims of ownership. “No company should claim ownership of public data that does not belong to them,” he told reporters. “It is possible that it is just an attempt to sell the same public data at an inflated price.”

This is Reddit’s second such lawsuit in recent months. The platform sued AI firm Anthropic in June 2025 over similar scraping allegations. That case remains ongoing.

Reddit has already signed lucrative licensing agreements with Google and OpenAI, allowing those companies to legally train AI models on user conversations. These deals now account for nearly 10% of Reddit’s revenue, according to statements made earlier this year.

The lawsuit seeks unspecified monetary damages and a court order blocking Perplexity from using Reddit data. Legal experts say the case could set important precedents about whether publicly available online content can be freely used to train AI systems.

Reddit shares closed down more than 4% following news of the lawsuit.