ChatGPT Trains on New York Times Articles and Get Sued

Yesterday The New York Times sued Microsoft and OpenAI since their chatbots were trained on copyrighted work.

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What Happened

The Simple Side’s (My) Take

Stock Movements Based on Lawsuit Outcomes

How to Capitalize on the Stock Movements

What Happened

Headlines yesterday were championed by the largest copyright lawsuit in the Manhattan Federal Court: The New York Times sues Microsoft and OpenAI. The copyright infringement lawsuit against the companies says that both used the newspaper’s content to train their models without permission. In doing so, the companies jeopardized Time’s business in its entirety. The Times also suggested in the filing that both companies should be liable for BILLIONS of damages. What prompted the lawsuit? Failed negotiations between the involved parties over the usage of Times material. They also stated they were worried about AI attributing false information to the newspaper. I guess when money is on the line news outlets decide to worry about whether their information is accurate or not. Now here is the real kicker - the Times is calling for both OpenAI and Microsoft to destroy all chatbots that use Times material. With OpenAI’s valuation, currently over $80 bn, coming almost completely from ChatGPT, this could compromise the integrity of the entire company.

The Simple Side’s (My) Take

The bad news is that I am not a legal professional and truly have no idea how this will go. While I do hold my own opinions, I have reached out to multiple lawyers to get more professional opinions and will be sure to add them here when they respond. In the meantime let’s jump into a couple of completely feasible outcomes.

1. The entire lawsuit is kaput: a.k.a, insignificant or thrown out

   To me, this lawsuit is somewhat of a joke: “Newspaper upset that companies use articles available online.” I honestly DO NOT think the lawsuit will amount to much. It seems like journalists at the Times are worried that they are going to lose money and jobs to AI and aren’t happy about it - rightfully so. However, being scared and upset about AI replacing you isn’t a good reason to cry out to the long arm of the law. When the case gets underway it will be interesting to see the arguments presented by the legal team for the Times.

2. The New York Times wins the lawsuit

   If the Times wins the lawsuit it could be a major step in journalism’s fight against AI. Not only would the victory set a legal precedent for future AI copyright cases, but it would mean significant damages being paid to the Times. They (the Times) could come into billions of dollars, possibly boosting the stock (ticker: NYT) to 52-week highs. This could also lead to a revaluation of the AI industry. If websites can “charge” for AI models training on their information, the profitability scales might shift. The more content you have online the more you could capitalize on AI models. AI companies are also not heavily regulated at the moment. A win for the Times could shift lawmakers’ attention to the growing market sector.

3. Microsoft and OpenAI win the lawsuit

   Similar to if the Times won, there would be a legal precedent set - AI models can be trained on any information. This could also reinforce the current AI industry and lead to possible growth in valuations for AI-invested stocks. The New York Times would also likely experience some negative effects, possibly paying lawyer fees for both defendants. In layman’s terms, Microsoft stock would be soaring up and the New York Times would be diving down.

Stock Movements Based on Lawsuit Outcomes

We see the MSFT and NYT stocks moving in all sorts of directions depending on the outcome of the pending lawsuit. No need to worry, you’re reading The Simple Side, so we’re gonna break it down for you. If nothing happens and the lawsuit is thrown out then Microsoft might suffer some residual damage from the negative headlines, but the stock price will remain relatively steady. If the New York Times wins then its stock will likely jump up probably both in the short and mid-term, but Microsoft will likely have a significant short-term drop. If Microsoft wins then its stock will jump in both the short and mid-to-long-term, whereas the Times stock will drop in the short term and likely recover within the mid-term. Here is a summation of all the movements we see happening based on the outcome of the lawsuit.

1. If the lawsuit gets thrown out

   1. MSFT →

   2. NYT →

2. The New York Times wins

   1. MSFT ↓

   2. NYT ↑

3. Microsoft wins

   1. MSFT ↑

   2. NYT ↓

Now we have three different scenarios with a bunch of stock movements going a bunch of different ways. How do we capitalize on the lawsuit? Instead of betting on which company will win- losing everything if that company loses, let’s just bet that one of the companies wins.

How to Capitalize on the Stock Movements