Perplexity Faces Privacy Lawsuit

AI search company Perplexity is facing a proposed class action lawsuit alleging that it shared users’ conversations and personal information with third-party advertising platforms without adequate consent, intensifying concerns about privacy across consumer AI services.

According to the complaint, tracking technologies associated with Google and Meta were allegedly embedded in Perplexity’s platform, potentially transmitting prompts, responses, email addresses, IP addresses and device information. The plaintiffs argue that users were not adequately informed about how their conversational data could be disclosed.

A major focus of the lawsuit is Perplexity’s Incognito Mode, which the complaint reportedly describes as a “sham.” It alleges that information continued to be transmitted to third parties even when consumers believed they were using a more private or anonymous mode. If established, the allegations could raise questions about whether privacy-related product claims accurately reflect how data is technically handled.

The stakes are particularly high because conversations with generative AI can contain substantially more personal context than conventional search queries. Users increasingly discuss financial planning, investments, business strategies, personal concerns and health-related topics with AI assistants. The lawsuit reportedly cites conversations involving tax strategies, Roth IRA planning, cannabis investments and health questions.

The allegations reportedly concern both subscribers and non-subscribers. The complaint further claims that, under certain circumstances, URLs associated with non-subscribers could potentially provide third parties access to broader conversation histories.

The case could have implications beyond Perplexity. AI platforms commonly depend on external analytics, advertising, cloud and performance-monitoring technologies. However, applying conventional web-tracking practices to highly contextual AI conversations could create significantly greater privacy exposure.

This makes privacy-by-design, informed consent and data minimization increasingly important. AI providers will need to clearly explain what information is collected, why it is processed, which third parties receive it and how users can control those disclosures. Features described as private or incognito will face particular scrutiny.

Claims regarding a $10,000 individual settlement or billion-dollar exposure remain unconfirmed based on the information available. The allegations themselves also remain subject to litigation.

The broader message is clear: as consumers entrust AI with increasingly sensitive information, privacy is becoming central to AI trust. Platforms seeking long-term consumer confidence must ensure that transparency, consent and technical privacy protections evolve as rapidly as their AI capabilities.