OpenAI's own docs 'eviscerate' its fair-use defense

A new tranche of internal emails and analysis unsealed last Thursday in The New York Times' lawsuit against OpenAI and Microsoft hands publishers the clearest public window yet into what tech executives were saying privately about their journalism. OpenAI's head of ChatGPT, Nick Turley, wrote that publishers face an "existential threat" from products that are "largely substitutive, period" and "will get more and more substitutive as they get better." Microsoft CEO Satya Nadella testified that chatting with an AI "has substituted ... giving you the information right there on the website on the AI platform versus needing to go to the underlying source," and Microsoft recorded 83-93% drops in click-through rates for the Times' and Daily News' domains when comparing Bing Search against its Copilot chatbot. The kicker, per legal experts: OpenAI president Greg Brockman responded "ah nice" when shown how its tech could bypass publisher paywalls, which moves the case out of fair-use gray area and into potential violation of the Digital Millennium Copyright Act. "The apparent admission by the head of ChatGPT that their products are substitutive will be difficult to walk back, and likely eviscerates the fair use defense," said Alan Chapell, founder of Chapell and Associates. Spur founder David Buttle added that "the defendants' own conduct establishes that the content has a market price. The case is about their refusal to pay it."

The crux

Tech giants privately acknowledged that their AI products substitute for, and threaten the economics of, the journalism they trained on, while paying nothing for it - and the paywall-bypass admission may push them into outright copyright liability rather than arguable fair use.

Sell-side read

If the court buys the Times' framing, publishers gain their strongest-ever leverage to force AI companies into paid, usage-based licensing - News/Media Alliance CEO Danielle Coffey expects collective negotiation "at scale" once the law is certain. Now is the moment to get licensing deals on the table, before a ruling sets the price floor.

Watch

Both sides are asking Judge Sidney Stein for summary judgment; a ruling either way sets the template for every publisher AI suit and the broader licensing market.