The New York Times (NYT) is suing Microsoft (MSFT) and OpenAI, the startup behind ChatGPT, over copyright infringement. The paper alleges millions of its articles were used to train AI programs and wants the companies to be held accountable for “billions of dollars in statutory and actual damages.” Yahoo Finance Live has the breaking details.

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Video Transcript

BRAD SMITH: "The New York Times" has sued OpenAI and Microsoft for copyright infringement. Filed in a federal district court in Manhattan, the lawsuit says millions of articles from "The Times" were used to train AI chat bots that now directly compete with the news publisher. The suit says that the defendants should be held responsible for, quote, "billions of dollars in statutory and actual damages," end quote.

The suit is a first of its kind, marking the first time a major media organization has sued the companies here. And we've been keeping tabs on shares of both NYT, as well as some of the other major news publications here this morning, just to see if there's movement. Not a ton as of right now.

BRIAN SOZZI: Well, I think you have to really break this down to two areas, Brad. First is what does it mean to some of the biggest companies in the market. Of course, OpenAI and Microsoft have really just seen their fortunes explode over the past year because the market has viewed these companies as really basically, they could do whatever they want in terms of AI, and nobody's going to challenge them.

What does it mean for a company like Google, which is going to have to ingest large amounts of information from the likes of "The New York Times" and other major publishers to train its large language models. And just talking to a lot of publishers in the industry of late, they're concerned about, first of all, they've had revenue drop from social media. So they're not really getting any revenue from these spaces anymore-- Facebook, you name it.

Now, they're being tasked with giving this information in some form to some of these tech companies, and they're not liking it because it's the path to getting paid is not yet clear.

BRAD SMITH: Yeah, absolutely. I've got the filing actually in front of me right now. And the OpenAI release of ChatGPT has driven its valuation, as we've spoken recently, as "The New York Times" acknowledges here within the filing, to as high as $90 billion. And the defendants, gen AI business interests are deeply intertwined.

Microsoft recently highlighting that its use of OpenAI's best in class frontier models has generated customers, including AI startups from Microsoft's Azure AI product. I think at the end of this, them even bringing this up points to the fact that, well, where's our cut? You're using--

BRIAN SOZZI: We all got to get paid, baby.

BRAD SMITH: Right. You're using and leveraging. so much of the data that goes into the ability to have inferential, not just the prompts that come in, but then all the inferential kind of solutions or answers that get popped out on the other side of that. And so with that in mind, I think that's where so many more of the news organizations may be looking for what comes of this.

And potentially, we'll see if they add on to some of the concerns that now Microsoft and OpenAI have to consider in addendum to-- Latin for you folks out there-- the concerns that they've got to think about over in the UK with regard to the Competition and Markets Authority looking at this combination not directly a acquisition or merger combination, but a type of investment in almost soft type of merger combination that they're alleging could have taken place as a result of this.

BRIAN SOZZI: And what this means to big tech companies? And you're right on, Brad. It means that I think if you're investing in these stocks that up and to the right is not necessarily going to be the case over the next few years. There will be challenges to this new business model of AI for these companies.

And, look, from a publisher standpoint, it's tough times. I think back to when I talked to Robert Thompson, the CEO of News Corp in September. He's looking for just a tsunami. That was his quote, a tsunami of job loss in the publishing industry because of AI. Who am I to argue with? Robert Thompson, I mean, the guy's been around the block.

BRAD SMITH: I'm not going to argue with him.