AI users sue Microsoft in antitrust class action over OpenAI deal

By Mike Scarcella

Oct 13 (Reuters) - Microsoft MSFT.O is facing a new lawsuit from consumers who allege the technology giant illegally inflated prices for generative artificial intelligence through a secret agreement with ChatGPT maker OpenAI.

The proposed class action filed in San Francisco federal court claims Microsoft used an exclusive cloud computing deal with OpenAI to restrict the supply of computational resources needed to run ChatGPT.

Microsoft has invested more than $13 billion in OpenAI to date.

The lawsuit said the deal Microsoft struck early in OpenAI’s development violated federal antitrust law by restraining market competition and artificially driving up ChatGPT subscription prices, while hurting product quality for millions of users of the AI platform.

Although the alleged restraints on OpenAI have since eased, they remain as “a sword of Damocles over OpenAI wielded by one of its principal competitors,” the lawsuit said.

Microsoft on Monday had no immediate comment.

OpenAI, which is not named as a defendant, did not immediately respond to a request for comment, and neither did attorneys for the 11 consumers who filed the lawsuit.

Microsoft in 2019 first announced it was investing $1 billion in San Francisco-based OpenAI, saying it had forged a multi-year partnership to develop AI supercomputing technologies on Microsoft's Azure cloud computing service.

OpenAI, founded in 2015 as a nonprofit, has since moved to restructure itself into a for-profit company.

The lawsuit said Microsoft exploited its agreement with OpenAI to profit from its success while preparing its own rival products, including the AI platform Copilot.

ChatGPT prices were substantially higher than competitors’ during a price war earlier this year, the lawsuit said.

The alleged restraint on OpenAI was partially lifted in June when OpenAI began purchasing compute power from Google, according to the lawsuit.

The plaintiffs seek damages for alleged overcharges dating back to ChatGPT’s launch in November 2022, as well as a court order to stop Microsoft from reimposing the restrictions.

The case is Samuel Bryant et al v. Microsoft Corp, U.S. District Court, Northern District of California, No. 3:25-cv-08733.

For plaintiffs: Yavar Bathaee and Brian Dunne of Bathaee Dunne

For defendant: No appearance yet

Read more:

Apple, OpenAI ask US judge to dismiss Musk's suit over competition claims

Nvidia to invest up to $100 billion in OpenAI, linking two artificial intelligence titans

Musk's xAI wins early order blocking engineer from sharing tech with OpenAI

Musk expands lawsuit against OpenAI, adding Microsoft and antitrust claims