Microsoft has been slammed with a new class action lawsuit filed in a federal court by consumers. According to reports, the lawsuit was filed regarding the tech giant’s multi-billion-dollar partnership with OpenAI, the maker of ChatGPT. Consumers are alleging that the deal violates antitrust laws and has led to Microsoft artificially inflating prices of its generative AI services.
The proposed class action was filed in a San Francisco federal court and claims that Microsoft used a secret, exclusive cloud computing deal with OpenAI to illegally limit the supply of computational power essential to run OpenAI’s popular platforms, including ChatGPT. The lawsuit further alleges that this alleged restriction on the market has hurt millions of users by driving subscription prices up while diminishing product quality.
Microsoft accused of market manipulation
Microsoft has seen its investment in OpenAI hit more than $13 billion to date. The tech giant first announced a $1 billion partnership in 2019, in a deal that established Azure as the key cloud computing service for the ChatGPT maker. This initiative, the plaintiffs noted, was used to corner the emerging generative AI market.
According to the court documents, the agreement allowed Microsoft to take advantage of OpenAI’s groundbreaking success for its own benefit, while it developed competing products like Microsoft Copilot. It further alludes to a price war among AI services experienced earlier this year, emphasizing that ChatGPT prices remained “substantially higher” than its competitors, allegedly because of Microsoft’s market manipulation, according to the plaintiffs.
According to a Reuters article, while the lawsuit admits that some of the tightest restrictions have recently eased with OpenAI reportedly beginning to buy compute power from Google in June this year, it warns that the threat remains in place. The plaintiffs describe the arrangement as “a sword of Damocles over OpenAI wielded by one of its principal competitors,” suggesting that Microsoft may re-impose the restrictions at any time.
Consumers seek damages and a stop order
The consumers are seeking unspecified damages for alleged overcharges dating back to the launch of ChatGPT in November 2022. Additionally, they are requesting a court order to permanently stop Microsoft from enforcing the allegedly anti-competitive limits on OpenAI. Microsoft has been under some regulatory scrutiny for some time.
The tech firm narrowly escaped the risk of a multibillion-euro fine after agreeing on a deal with the EU to loosen the grip of its workplace chat service, Teams, on the professional software market. This happened after over a year of antitrust bickering, which was triggered by complaints from rival platforms, which later led to the EU accepting commitments regarded as binding from Microsoft.
The commitments were also in relation to Microsoft being required to sell versions of its Office 365 and Microsoft 365 suites without Teams, as the Cryptopolitan previously reported. As for the latest case, both Microsoft and OpenAI had no immediate comment on the lawsuit, nor did attorneys at Bathaee Dunne for the 11 consumers who filed the lawsuit have a comment immediately.
