Microsoft and OpenAI Hit by New Lawsuit by Notorious “News Vulture” Alden Global Capital

Key Takeaways

• Eight newspapers owned by the controversial Alden Global Capital have initiated a lawsuit against OpenAI and Microsoft.
• OpenAI claims their actions fall under the “fair use” doctrine, which allows limited use of copyrighted material without permission for specific purposes.
• This lawsuit is part of a series of legal actions against OpenAI regarding the datasets used to train its generative AI models.

A new lawsuit filed by a group of US newspapers represented by Alden Global Capital against Microsoft and OpenAI centers on the claim that these tech companies used copyrighted news articles to train their AI models without permission or payment.

The collective argues that this practice involves millions of articles, significantly benefiting the tech companies financially and avoiding the costs associated with journalistic work.

OpenAI’s recent lawsuit is just the latest in a series of legal challenges OpenAI faces over the datasets used to train its generative AI models.

Alden Global Capital’s Copyright Lawsuit

Filed in the Southern District of New York on Tuesday this legal action accuses the tech giants of improperly using copyrighted news articles to train their AI chatbots, such as ChatGPT and Microsoft Copilot.

The publishers are concerned that these AI tools are replicating and distributing their content without adequate attribution or links back to the original articles, potentially undermining the newspapers’ subscription and licensing revenues.

“We’ve spent billions of dollars gathering information and reporting news at our publications, and we can’t allow OpenAI and Microsoft to expand the Big Tech playbook of stealing our work to build their own businesses at our expense,” said Frank Pine, executive editor for the MediaNews Group and Tribune Publishing, in a written statement shared by The Associated Press.

The eight newspapers suing OpenAI and Microsoft are the New York Daily News, Chicago Tribune, Denver Post, Mercury News, Orange County Register, St. Paul Pioneer-Press, Orlando Sentinel, and South Florida Sun Sentinel, all of which are owned by Alden Global Capital.

Fair Use Defence

OpenAI and Microsoft defend their actions under the “fair use” doctrine of US copyright law , which allows the use of copyrighted material without permission for certain purposes, particularly when the use is transformative.

“the fair use of a copyrighted work, including such use by reproduction in copies or phonorecords or by any other means specified by that section, for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright” the doctrine states.

This law considers several factors to determine if the use is fair, including the purpose and character of the use, the nature of the copyrighted work, the amount used, and the effect of the use on the market value of the copyrighted work​​​​.

The core of the newspapers’ argument is that the AI’s use of their content is not transformative but rather serves as a direct substitute for the original articles, potentially diverting readers and revenue away from the newspapers. They assert that the AI can reproduce substantial portions of articles verbatim, which undermines the newspapers’ ability to monetize their own content​​​​.

The Grim Reaper of American Newspapers

“It is pretty rich for Alden Global Capital – the “news vulture” hedge fund that has done the most to gut local newsrooms – is now upset about AI allegedly gutting local newsrooms,” said Founder and CEO of Progress Chamber, Adam Kovacevich in a Twitter  post.

Aden Capital is one of the most infamous hedge funds in the sector for decimating many newspapers around the US. In 2020, Vanity Fair even referred to the firm  as the “grim reaper of American newspapers”.

the controversial New York City-based investment firm known for its aggressive management of newspaper assets, has recently upped its stake in Tribune Publishing to 32%, becoming its largest shareholder and securing two board seats.

CCN reached out to Alden Global Capital who did not immediately respond to a request for comment.

New York Times Lawsuit

Given the leaps in generative AI development, it makes sense that we are also witnessing parallel concerns over the use of copyrighted materials in training AI models. Other recent similar lawsuits include The New York Times against the same defendants, alleging that their AI models reproduced large sections of its content without permission.

The New York Times highlighted the potential market harm such practices could inflict on traditional news outlets, arguing that AI chatbots could dissuade readers from visiting original sources, thereby affecting advertising and subscription revenues crucial for journalistic operations.

OpenAI’s ongoing legal troubles are part of a broader debate about the ethical and legal implications of using vast amounts of internet-scraped data to train AI systems. The outcome of this will likely have a significant impact on the AI industry and copyright law. Influencing how AI developers and content creators interact and negotiate the use of copyrighted materials moving forward​​​.