New York Times Sues Microsoft and OpenAI for Copyright Infringement

(Bloomberg) -- The New York Times Co. sued Microsoft Corp. and OpenAI Inc. for using its content to help develop artificial intelligence services, in a sign of the increasingly fraught relationship between the media and a technology that could upend the news industry.

The technology firms relied on millions of copyrighted articles to train chatbots like ChatGPT and other AI features, allegedly causing billions of dollars in statutory and actual damages, according to a lawsuit filed in New York on Wednesday. The Times didn't specify its monetary demands.

OpenAI has faced criticism for scraping text widely from the web to train its popular chatbot since it debuted a year ago. While it has been sued by prominent authors, this is the first challenge to its practices by a major media organization. The startup has sought licensing deals with publishers, much like Alphabet Inc.’s Google and Meta Platforms Inc.’s Facebook have done in recent years. The Times’ lawsuit said the publisher reached out to Microsoft and OpenAI in April and couldn’t reach an amicable solution.

"We respect the rights of content creators and owners and are committed to working with them to ensure they benefit from AI technology and new revenue models," an OpenAI spokesperson said in a statement. "Our ongoing conversations with the New York Times have been productive and moving forward constructively, so we are surprised and disappointed with this development." Microsoft declined to comment.

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In July, OpenAI signed an agreement with the Associated Press to access some of the news agency's archives. OpenAI cut a three-year deal in December with Axel Springer SE to use the German media company's work for an undisclosed sum.

"We're hopeful that we will find a mutually beneficial way to work together, as we are doing with many other publishers," OpenAI's spokesperson said Wednesday.

OpenAI has faced multiple lawsuits from content producers complaining that their work has been improperly used for AI training. The company faces class actions from cultural figures including comedian Sarah Silverman, Game of Thrones author George R.R. Martin, and Pulitzer-winning author Michael Chabon.

The cases are still in their early stages and could take years to fully resolve. A judge in San Francisco earlier this month hinted at trimming Silverman's copyright lawsuit against OpenAI. The judge had already narrowed a similar Silverman suit against Meta.

New Financing

OpenAI is currently in talks with investors for new financing at a $100 billion valuation that would make it the second-most valuable US startup, Bloomberg News reported last week.

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Microsoft is OpenAI's largest backer and has deployed the startup's AI tools in several of its products. In the lawsuit, the New York Times alleged Microsoft copied the newspaper's articles verbatim for its Bing search engine and used OpenAI's tech to boost its value by a trillion dollars.

Microsoft's share price has risen 55% since ChatGPT debuted in November 2022, increasing its market capitalization to $2.8 trillion. Shares were down 0.3% to $373.38 at 11:25 a.m. in New York on Wednesday.

"If Microsoft and OpenAI want to use our work for commercial purposes, the law requires that they first obtain our permission," a New York Times spokesperson said in an emailed statement on Wednesday. "They have not done so."

The case is The New York Times Co. v. Microsoft Corp., OpenAI Inc., S.D.N.Y, No. 1:23-cv-11195, 12/27/23.