Wolf River Electric, a Minnesota solar company, is suing Google for $110-210 million in damages after the tech giant’s AI Overviews feature allegedly fabricated defamatory claims about the company facing lawsuits for deceptive sales practices. The case represents potentially groundbreaking legal territory as courts grapple with whether AI companies can be held liable for harmful misinformation generated by their large language models.
What happened: Google’s AI Overviews confidently claimed Wolf River Electric was being sued by Minnesota Attorney General Keith Ellison for “deceptive sales practices,” including lying to customers about savings and tricking homeowners into signing contracts with hidden fees.
- The false information appeared when users searched “Wolf River Electric lawsuit,” a plausible query for potential customers researching the company’s background.
- Google’s AI cited four sources to back up its claims—two news articles, a statement from the state’s attorney general, and Angie’s List—but none actually mentioned any lawsuit against Wolf River Electric.
- Some of the cited links mentioned lawsuits against other solar companies, but contained nothing about Wolf River Electric specifically.
The business impact: Several customers canceled contracts worth up to $150,000 each after reading the false AI-generated information.
- The lawsuit, first filed in state court in March, was transferred to federal court this week after Google requested the removal.
- Wolf River Electric is seeking damages between $110 million and $210 million for the alleged defamation.
Legal significance: This case could establish crucial precedent for AI liability in defamation cases, according to legal experts.
- “This might be one of the first cases where we actually get to see how the courts are going to really dig down and apply the basic principles of defamation law to AI,” said Ari Cohn, lead counsel for tech policy at the Foundation for Individual Rights in Education (FIRE), a free speech advocacy organization.
- Wolf River Electric likely won’t be considered a public figure, meaning they only need to prove Google was negligent rather than demonstrating “actual malice.”
What they’re saying: Wolf River Electric’s general counsel emphasized the broader implications beyond their specific case.
- “This lawsuit is not just about defending our company’s reputation; it’s about standing up for fairness, truth, and accountability in the age of artificial intelligence,” said Nicholas Kasprowicz.
- “No corporation, regardless of its size or market dominance, should be permitted to release powerful AI tools that generate and spread false information without proper oversight or consequences.”
Google’s response: The tech giant denied the defamation allegations and characterized the incident as a routine technological mishap.
- “The vast majority of our AI Overviews are accurate and helpful but like with any new technology, mistakes can happen,” Google said in a statement.
- “As soon as we found out about the problem, we acted quickly to fix it.”
Why this matters: The case highlights the growing tension between AI innovation and accountability as companies deploy increasingly powerful language models without clear liability frameworks.
- UCLA Law professor Eugene Volokh noted that Wolf River Electric “claims they’ve got the receipts” with documented financial losses, providing stronger evidence than many defamation cases typically have.
- The outcome could significantly impact how AI companies approach content moderation and fact-checking for their automated systems.
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