Observed Signal · Sep 18, 2026 · Policy Update · Source: t3n · Impact: 5/5 · Sentiment: Negative
Microsoft Managers Call AI Training 'Ridiculous Theft'
In a copyright lawsuit filed by The New York Times against Microsoft and OpenAI, internal documents reveal that senior Microsoft executives privately view AI training on copyrighted content as a massive theft of labor, despite public justifications. Brent Hecht, head of applied sciences at Microsoft, called it "astonishing theft of unprecedented scale," while OpenAI's ChatGPT chief Nick Turley admitted the technology poses an "existential threat" to news publishers. The documents also suggest that internal opinions about the "fair use" defense are skeptical, with concerns that prevailing on it would make the term meaningless. Microsoft executives, including CEO Satya Nadella, acknowledged under oath that chatbots can replace visits to original sources, leading to a potential "vicious circle" harming both models and the internet. The case, still ongoing, is a key precedent for whether AI training qualifies as fair use.
This is a major legal and regulatory development involving AI training on copyrighted content, with internal doubts from key players, signifying a potential industry-shifting precedent for AI and publishing.
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Key Takeaways & Evidence Grounding
- Internal Microsoft documents were released in the New York Times lawsuit against Microsoft and OpenAI.
- Microsoft's Brent Hecht described AI training on copyrighted texts as 'astonishing theft of unprecedented scale'.
- OpenAI's ChatGPT chief Nick Turley admitted internally that AI poses an 'existential threat' to publishers.
- Microsoft CEO Satya Nadella acknowledged in sworn testimony that chatbots can replace visits to original sources.
- The New York Times sued Microsoft and OpenAI over unauthorized use of its articles for AI training.
Connected Companies & Entities
3 Entities mapped“Brent Hecht, Head of Applied Sciences at Microsoft”
“OpenAI's ChatGPT chief Nick Turley”
“The copyright lawsuit filed by The New York Times against Microsoft and OpenAI”
Ontology Mapping & Concepts
Related Market Signals & Shifts
Recent verified developments and strategic activity across this market segment.
Microsoft Exec Calls AI Scraping 'Largest Theft of Labor in Human History'
Newly unsealed filings in the New York Times' copyright lawsuit against OpenAI and Microsoft reveal internal admissions that AI training practices constituted theft. A Microsoft executive described AI scraping as 'the largest theft of labor in human history,' and OpenAI leadership acknowledged an 'existential threat' to publishers. The documents detail how the companies allegedly bypassed paywalls, stripped copyright notices, and built massive datasets from scraped news content. Microsoft's own data showed a 93% drop in click-through rates for The New York Times due to AI answer engines, threatening the economic foundations of publishers. These revelations challenge OpenAI's fair use defense and highlight the significant harm to the publishing industry.
NYT-Opening Documents Reveal AI Scraping, Fair-Use Impact on Publishers
Newly unsealed documents in The New York Times' lawsuit against OpenAI and Microsoft reveal internal admissions that AI products are 'largely substitutive' and pose an 'existential threat' to publishers. Legal experts say this eviscerates the fair-use defense, especially given evidence of paywall circumvention, which may violate the DMCA. The filings could catalyze more publisher lawsuits and force AI companies into paid licensing markets. Executives from OpenAI, Microsoft, and other AI firms are shown acknowledging the commercial value of news content while using it without permission. The case, presided over by Judge Sidney Stein, may set precedent for AI training on copyrighted works, reshaping the terms of trade between AI and publishing.
OpenAI Defends AI Training as Fair Use
OpenAI has published excerpts from amicus curiae briefs filed by various groups and individuals in support of its position that training AI models on copyrighted works constitutes fair use. The briefs, submitted in the copyright lawsuit brought by The New York Times, argue that AI training is transformative and does not harm the market for original works. Supporters include non-profit organizations like Public Knowledge, trade associations like the Consumer Technology Association, and prominent individuals such as Pulitzer Prize-winning journalist Ron Suskind and author Kevin Kelly. The submissions emphasize the broader societal benefits of AI, including accessibility, medical research, and innovation, and argue that restricting fair use would stifle progress. The U.S. government's brief also cautions against narrowing fair use doctrine, highlighting potential harm to American prosperity and scientific advancement.
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