Microsoft, OpenAI Must Pay ‘Fair Value’ for AI-Training Content, Contend 8 Newspapers

Microsoft and OpenAI are “purloining” millions of copyrighted newspaper articles without permission and without payment to “fuel the commercialization” of their generative AI products, including ChatGPT and Copilot, alleged eight major local newspapers in a copyright infringement suit Tuesday (docket 1:24-cv-03285) in U.S. District Court for Southern New York in Manhattan. A similar New York Times lawsuit has been pending against Microsoft and OpenAI in the same court since Dec. 27 (see 2312270044).

Microsoft and OpenAI have created their GenAI products in violation of the law by using important journalism created by the newspapers without any compensation, said the complaint. The plaintiffs are the New York Daily News, the Chicago Tribune, the Orlando Sentinel, the Sun Sentinel of South Florida, the San Jose Mercury-News, the Denver Post, the Orange County Register of central California and the Pioneer Press of Minnesota. Lead counsel for the plaintiffs is Steven Lieberman of Rothwell Figg. The firm also belongs to the team representing the Times in the December action.

Microsoft and OpenAI “need high quality content in order to make their GenAI products successful,” said the complaint. Despite admitting that they need copyrighted content to produce a commercially viable GenAI product, Microsoft and OpenAI contend “that they can fuel the creation and operation of these products” with copyright newspaper content “without permission and without paying for the privilege,” it said: “They are wrong on both counts, as this lawsuit will prove.”

In recent years, the biggest threat to local news generally, and local newspapers in particular, “has been the development of the internet and the theft of newspapers’ content and the consequent siphoning of advertising revenue,” said the complaint. The newspapers that survived “this historic transformation in news delivery” were able to do so in part “because they continued to provide content that their readers found to be informative, entertaining, and valuable,” it said.

Microsoft and OpenAI simply take the work product of reporters, journalists, editorial writers, editors and others who contribute to the work of local newspapers, “all without any regard for the efforts, much less the legal rights, of those who create and publish the news on which local communities rely,” said the complaint. The publishers of the eight newspapers “are regional and local news organizations that provide reporting critical for the neighborhoods and communities that form the very foundation of our great nation,” it said.

The publishers have spent billions of dollars “sending real people to real places to report on real events in the real world,” and distribute that reporting in their print newspapers and on their digital platforms, said the complaint. Yet the defendants are stealing that copyrighted work “with impunity” and are using the stolen journalism to create GenAI products that “undermine” the publishers’ “core businesses,” it said.

They do so by retransmitting the content, in some cases verbatim from the newspapers’ “paywalled websites,” to their readers, said the complaint. As if plagiarizing the journalism weren’t enough, the Microsoft and OpenAI products are often subject to “hallucinations,” where those products malign the publishers’ credibility by “falsely attributing inaccurate reporting” to their newspapers, it said. Beyond just profiting from the theft of copyrighted content, the defendants “are actively tarnishing the newspapers’ reputations and spreading dangerous disinformation,” it said.

The surviving newspapers are “increasingly a rare breed in America,” and they now face “a new threat” in the GenAI products offered by Microsoft and OpenAI, said the complaint. In their GenAI products’ “formative stages,” Microsoft and OpenAI scrape the newspapers’ content, copying it onto their systems, it said. The scraped content “becomes part of the raw material on which Microsoft and OpenAI train their GenAI systems,” it said.

Microsoft and OpenAI “bizarrely claim” they’re entitled “to copy and use any written product on which they want to train their GenAI systems,” said the complaint. They also say that even after their systems are trained, “they are entitled to copy local newspapers day in and day out, and store the newspapers’ content on their servers, as source materials for their GenAI products’ output,” it said.

The defendants “even go so far as to say that their GenAI products are allowed to copy and provide back to their users verbatim reprints of local news articles, editorials, reviews, and stories that the local reporters and editors spend their time, resources, and in some cases even their physical safety, to write and publish,” said the complaint. Microsoft and OpenAI have gone so far as to say that, “if anyone should be held liable for the improper use of local newspaper content, it should be the unsuspecting users of Microsoft’s and OpenAI’s own products,” it said.

The plaintiffs “seek no more than what Microsoft and OpenAI claim for themselves: recognition that newspapers have legal rights in their content,” said the complaint. Microsoft and OpenAI “are legally required to respect those rights,” it said. They owe the newspapers compensation “for their unlawful use of protected newspaper content to date,” it said.

Both Microsoft and OpenAI “are well aware of the value of the newspaper content they have exploited,” said the complaint. Microsoft’s deployment of Copilot, its GenAI tool that uses the Bing search index, “has helped boost its market capitalization by a trillion dollars in the past year alone,” it said. OpenAI, “which used to pretend” it was a nonprofit, “now has a market capitalization of over $90 billion,” it said.

Yet both companies “continue to deny that they owe anything to even a single newspaper whose content they have copied, and continue to copy, to build and operate their GenAI products,” said the complaint. This lawsuit isn’t a battle between new technology and old technology, nor is it a “battle between a thriving industry and an industry in transition,” it said.

The lawsuit “most surely” isn’t a battle “to resolve the phalanx of social, political, moral, and economic issues that GenAI raises,” said the complaint. The litigation “is about how Microsoft and OpenAI are not entitled to use copyrighted newspaper content to build their new trillion-dollar enterprises, without paying for that content,“ it said. As the lawsuit will demonstrate, the defendants must both obtain the publishers’ consent to use their content “and pay fair value for such use,” it said.