Key Takeaways
- Microsoft is being sued by consumers who claim it used its exclusive partnership with OpenAI to raise prices and suppress competition in the AI market.
- The lawsuit argues that Microsoft’s early investment gave it too much influence as OpenAI transitioned from a nonprofit to a commercial operation, allowing the company to profit while limiting broader access to AI tools.
- This case mirrors broader industry concerns, as similar lawsuits against X Corp and Google reveal growing backlash over how tech giants may be centralizing power in AI, pushing smaller players to the sidelines.
- The legal challenges point to a rising tension between innovation and control, with courts being asked to decide whether Big Tech’s AI strategies violate antitrust laws.
A group of consumers has filed a lawsuit against Microsoft, accusing the tech giant of using its early partnership with OpenAI to inflate prices and restrict competition in the expanding artificial intelligence market.
The lawsuit, filed in a San Francisco federal court, claims Microsoft’s exclusive access to OpenAI’s computing power helped it get ahead in the AI race, while driving up the cost of tools like ChatGPT, leaving users paying more for less.
Microsoft invested in OpenAI back in 2019, at a time when the startup was still a nonprofit. That deal gave Microsoft a strong foothold as OpenAI transitioned into a commercial company. According to the lawsuit, Microsoft took advantage of this position to profit off OpenAI’s success while building its own competing services, including the AI assistant Copilot.
Although OpenAI has recently started working with other tech providers like Google to reduce its reliance on Microsoft, the lawsuit argues that Microsoft’s influence is still significant. The filing describe it as a threat hanging over OpenAI, giving Microsoft an edge over competitors and consumers alike.
The lawsuit seeks financial compensation for alleged overcharges dating back to ChatGPT’s launch in November 2022. It also calls for a court order that would block Microsoft from reintroducing any restrictions that might limit competition across the broader market.
Microsoft said it is reviewing the claims but insists its partnership with OpenAI supports healthy competition, new ideas, and responsible development in the industry.
AI Lawsuits Put Big Tech Under Fire
The claims against Microsoft resemble a separate legal fight unfolding between Eliza Labs and X Corp, formerly known as Twitter.
Filed earlier this year in the same California court, the lawsuit accuses X Corp of using its platform dominance to gain access to Eliza’s proprietary technology under the guise of collaboration, only to abruptly suspend the startup’s access and roll out a competing product.
Another case that sheds light on the growing tension between AI innovation and platform dominance involves Google and education tech firm Chegg.
In a lawsuit filed earlier this year, Chegg accuses Google of using its AI-generated search summaries, known as “AI Overviews”, to divert traffic away from educational sites like its own.
According to the complaint, Google’s AI tools answer user queries directly on the search page, reducing the need to click through to original sources.
Chegg argues this not only harms content creators but also unfairly benefits Google’s own AI offerings by leveraging its monopoly in search.
Although the details differ from the Microsoft-OpenAI case, both lawsuits reflect a broader trend in the industry, where the way tech giants are integrating AI into their platforms may be pushing smaller startups to the sidelines.
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