Microsoft Faces Antitrust Class Action Over Alleged Secret Deal with OpenAI

Microsoft is facing a new lawsuit from consumers who allege that the technology giant illegally inflated prices for generative artificial intelligence through a secret agreement with ChatGPT maker OpenAI.

 

The proposed class action, filed in San Francisco federal court, claims Microsoft used an exclusive cloud computing deal with OpenAI to restrict the supply of computational resources needed to operate ChatGPT.

 

Microsoft has so far invested more than $13 billion in OpenAI.

 

The lawsuit states that the deal Microsoft struck early in OpenAI’s development violated federal antitrust law by restraining market competition and artificially driving up ChatGPT subscription prices, while reducing product quality for millions of users of the AI platform.

 

Although the alleged restraints on OpenAI have since eased, they remain as “a sword of Damocles over OpenAI wielded by one of its principal competitors,” according to the lawsuit.

 

Microsoft, in a statement, said that while it was still reviewing the lawsuit, “we believe that our OpenAI partnership promotes competition, innovation, and responsible AI development.”

 

OpenAI, which is not named as a defendant, declined to comment. Lawyers representing the 11 consumers who filed the lawsuit did not immediately respond to a request for comment.

 

Microsoft first announced in 2019 that it was investing $1 billion in San Francisco-based OpenAI, saying it had forged a multi-year partnership to develop AI supercomputing technologies on Microsoft’s Azure cloud computing service.

 

OpenAI, founded in 2015 as a non-profit, has since restructured itself as a for-profit company.

 

The lawsuit alleges that Microsoft exploited its agreement with OpenAI to profit from its success while developing its own rival products, including the AI platform Copilot.

 

ChatGPT prices were said to be substantially higher than competitors’ during a price war earlier this year, according to the lawsuit.

 

The alleged restraint on OpenAI was partially lifted in June when OpenAI began purchasing computing power from Google, the plaintiffs claim.

 

The plaintiffs seek damages for alleged overcharges dating back to ChatGPT’s launch in November 2022, as well as a court order to prevent Microsoft from reimposing the restrictions.

 

The case is Samuel Bryant et al v. Microsoft Corp, U.S. District Court, Northern District of California, No. 3:25-cv-08733.