Perplexity’s privacy lawsuit bombshells will make you sweat about using the AI tool

Perplexity, one of the fastest-growing AI search tools right now, is suddenly facing some serious heat. And this time, it’s not about accuracy or hallucinations.

A fresh lawsuit is raising uncomfortable questions about what actually happens to user data behind the scenes, especially when people assume their chats are private. And if the allegations hold any weight, this could be one of those moments that prompts many users to rethink how casually they share information with AI tools.

Is Perplexity’s “incognito mode” actually private?

According to a newly filed class-action lawsuit by an anonymous Perplexity user, John Doe, not quite. The complaint alleges that Perplexity’s so-called incognito mode is essentially a “sham” that fails to protect user data as most people would expect.

The lawsuit claims that user conversations, including potentially sensitive topics like financial advice, health concerns, or legal queries, were shared with third parties like Google and Meta. And as reported by Ars Technica, this happened even when users explicitly chose incognito mode, which is supposed to limit tracking and data collection.

What’s more concerning is the kind of data allegedly involved. Reports suggest that information such as IP addresses, email IDs, geolocation data, and even full chat transcripts may have been passed along for ad targeting purposes. The lawsuit also accuses Perplexity of embedding tracking tools similar to those used in online advertising, without clearly informing users. In some cases, it even claims that entire conversations could be accessed via publicly reachable links.

Why this lawsuit could change how we trust AI

This goes beyond one app as AI tools feel personal, which makes oversharing easy. The lawsuit also claims years of chats were shared with ad giants, and that Perplexity doesn’t clearly surface its privacy policy like rivals do.

If true, it could force stricter transparency across AI platforms. For now, they’re just allegations, but enough to make that next AI prompt feel a little less casual.