OpenAI’s Faces New Legal Challenges from Class Action Lawsuit

According to news sources, a new class action lawsuit accuses ChatGPT creator OpenAI of criminally scraping data from all over the internet, then using the stolen data to create its popular automated products. The lawsuit, filed this week by the Clarkson Law Firm in a Northern California court, is only the latest in a slew of legal challenges that strike at the very heart of the influential startup’s business model.

Since it pivoted from a humble research organization to a for-profit business in 2019, OpenAI has been on a meteoric ascent to the very top of the tech industry. When it launched ChatGPT last November, the company became a household name.

But as OpenAI attempts to stand up its business and lay the groundwork for future expansion, the controversial nature of the technology that it’s selling may sabotage its own ambitions. Given the radicalness and newness of the AI industry, it only makes sense that legal and regulatory issues would develop. And if legal challenges like the one filed this week hold sway, they could undermine the very existence of OpenAI’s most popular products and, in turn, may threaten the nascent AI industry that revolves around them.

The central claim in the Clarkson lawsuit is that OpenAI’s entire business model is based on theft. The lawsuit specifically accuses the company of creating its products using “stolen private information, including personally identifiable information, from hundreds of millions of internet users, including children of all ages, without their informed consent or knowledge.”

It’s well known that OpenAI’s large language models—which animate platforms like ChatGPT and DALL-E—are trained on massive amounts of data. Much of this data, the startup has openly admitted, was scraped from the internet. By and large, most web scraping is legal, though there are some wrinkles to that basic formula. While OpenAI has claimed that everything it does is above board, it has also been repeatedly criticized for a lack of transparency regarding the sources of some of its data. According to this week’s lawsuit, the startup’s practices are blatantly illegal; specifically, the suit accuses the company of violating multiple platforms’ terms of service agreements while also running afoul of various state and federal regulations—including privacy laws.

Despite established protocols for the purchase and use of personal information, Defendants took a different approach: theft. They systematically scraped 300 billion words from the internet, “books, articles, websites and posts – including personal information obtained without consent.” OpenAI did so in secret, and without registering as a data broker as it was required to do under applicable law.

The lawsuit also highlights the fact that, after OpenAI freely exploited everybody’s web content, it then proceeded to use that data to build commercial products that it is now attempting to sell back to the public for exorbitant sums of money.

Whether the U.S. justice system ends up agreeing with the lawsuit’s definition of theft is yet to be determined. All of this legal turmoil takes place against the backdrop of OpenAI’s meteoric ascent to Silicon Valley stardom—a precarious new position that the company is clearly fighting to maintain.

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