Google and Perplexity lose their liability shield as regulators reframe AI outputs
Germany's Commission for Licensing and Supervision has ruled that Google's AI Overviews and Perplexity AI are content publishers under the country's State Media Treaty, stripping both companies of the liability protections they have relied on under the Digital Services Act. The ruling, issued in mid-July 2026, is the first of its kind in Europe. It turns on a simple legal question: when an AI system produces a summary, is it displaying someone else's content or creating its own?
German regulators concluded that AI-generated outputs are independently created content, not passive displays of third-party material. That distinction matters because the DSA's liability exemptions were designed for platforms that host and transmit content made by others, a category that, in the regulators' view, no longer describes what Google and Perplexity do.
The liability exemption at stake
The DSA framework has functioned as a legal backstop for major platforms since it took effect across the EU. Under its hosting and transmission provisions, a service that only carries or indexes third-party content bears limited responsibility for what that content says. Germany's regulators now argue that AI-generated summaries fall outside that framework.
A German court had already found Google liable for inaccurate information in its AI-produced results before the Commission's ruling, providing a judicial foundation for the regulatory move. The Commission's classification under the State Media Treaty formalizes that logic and extends it to Perplexity, whose chatbot responses the regulators treat as original content produced by the provider.
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In practice, both companies now face obligations that apply to media organizations: requirements around accuracy, transparency, and accountability that exceed what the DSA demands of platforms.
Why this reading of the DSA is contested
The DSA was drafted at the EU level, and member states applying national media law to services that also function under that EU framework creates a potential conflict of jurisdiction. Germany asserts that its State Media Treaty governs content creation in a way the DSA does not address, a reading that other EU member states have not yet adopted.
Whether the European Commission will accept that interpretation or treat Germany's move as an overreach into harmonized EU law remains unresolved. Neither the Commission nor Google or Perplexity has publicly addressed it.
The broader European context
Germany's ruling arrives as European scrutiny of generative AI services has grown sharper. Classifying AI outputs as media content rather than search results reaches well beyond these two companies. Any AI service that synthesizes information and presents it to users, instead of simply linking to sources, could face the same analysis under this framework.
For Google, AI Overviews are a core part of its search product and are deployed globally. For Perplexity, whose entire product is built around AI-produced answers, the compliance burden under media law would be structurally more significant. Both companies will need to determine whether they can satisfy German media obligations or challenge the ruling through the courts.
The next checkpoint is whether either company files a legal challenge to the Commission's classification. Such a step would force German courts to rule on whether the State Media Treaty can override DSA liability protections, and possibly send the question to the Court of Justice of the European Union.