Microsoft Faces Antitrust Lawsuit Over OpenAI Partnership

Microsoft’s close partnership with OpenAI is under legal fire. A new class action lawsuit filed in a San Francisco federal court accuses the tech giant of illegally manipulating the AI market through its exclusive deal with the ChatGPT maker.

The plaintiffs, 11 AI users from across the U.S., allege Microsoft’s billion-dollar partnership gave it unfair control over cloud resources needed to power ChatGPT and other generative AI tools. That control, they claim, drove up prices and reduced innovation, leaving users with fewer affordable choices.

Microsoft began investing heavily in OpenAI in 2019, pouring over $13 billion into the San Francisco–based startup. The deal made Microsoft the exclusive cloud provider for OpenAI’s AI models, integrating ChatGPT and related technologies deeply into Microsoft’s ecosystem through products like Copilot.

According to the lawsuit, that partnership effectively locked OpenAI’s computing power to Microsoft’s Azure cloud, restricting rivals from accessing comparable resources and allowing Microsoft to profit while maintaining a grip on the emerging AI market.

The complaint also alleges that Microsoft’s influence led to artificially high ChatGPT subscription prices, especially during this year’s competitive price war among AI platforms.

Microsoft Defends Partnership

Microsoft has denied any wrongdoing, stating it believes its collaboration with OpenAI “promotes innovation and healthy competition.” OpenAI, which isn’t named as a defendant, has not commented on the case.

Still, the plaintiffs argue Microsoft’s behavior echoes classic monopoly tactics, designed to dominate a fast-growing industry before meaningful regulation arrives.

They’re seeking damages for alleged overcharges since ChatGPT’s 2022 launch, along with a court order to prevent Microsoft from reinstating similar restrictions.

The case, Samuel Bryant et al v. Microsoft Corp, could become one of the first major tests of antitrust law in the age of generative AI.

via: Reuters