In the latest round of legal maneuvers surrounding artificial intelligence and copyright, Microsoft finds itself in the thick of a high-profile lawsuit filed by The New York Times and a coalition of other prominent news organizations. This case underscores the growing tensions between technology giants leveraging generative AI tools and the publishers whose content becomes the training fodder for those very models. As these fault lines deepen, Microsoft’s most recent attempt to protect its consumer-focused Copilot AI division from legal entanglement illuminates not just the complexities of modern AI systems, but also the significant business and ethical questions that will define the future of digital media.
The roots of this lawsuit stretch back to December 2023 when The New York Times, together with Daily News LP (parent company of the New York Daily News) and the Center for Investigative Reporting, filed a federal suit in the Southern District of New York. Their central allegation remains straightforward but weighty: Microsoft and its close partner OpenAI, the creator of ChatGPT, engaged in the mass, unauthorized scraping of copyrighted journalism to fuel their cutting-edge AI systems, diverting readers and undercutting the financial sustainability of original reporting.
This confrontation, by no means unique, is emblematic of a broader reckoning facing the tech and media industries as powerful large language models (LLMs) ingest unimaginable quantities of digital text—including premium journalism—to learn the contours of human language. The stakes are significant, as the outcome could shape both the business models and ethical boundaries for artificial intelligence in the information age.
The business version, integrated with Microsoft 365, first grabbed headlines as it brought AI-generated assistance into productivity suites, offering features like document summarization, schedule coordination, and intelligent email drafting. However, it is the newer consumer-focused Copilot that lies at the heart of the current legal gambit.
Launched in October 2024, the consumer Copilot was born from a newly-assembled team under the leadership of Mustafa Suleyman—one of the most respected figures in AI, previously a co-founder of Google’s DeepMind and, until recently, chief of AI startup Inflection AI. Suleyman’s arrival at Microsoft in March 2024, along with several Inflection AI colleagues, was widely seen as a coup, signaling Microsoft’s intent to lead not just in enterprise AI but in seamless, personalized consumer experiences.
Consumer Copilot, unlike its business sibling, brought a redesigned user interface and new features, such as personalized daily news summaries, natural voice interactions, and the ability to serve as a digital “companion” while browsing the web. These deep integrations with consumer-facing media experiences have put the tool directly in the crosshairs of news organizations concerned about content reuse and loss of audience.
Microsoft, for its part, is fighting to keep the focus of discovery strictly on older iterations, contending in a federal court filing that the revised consumer Copilot “did not exist at the time News Plaintiffs filed their complaints, is built on a different platform with new system architecture than the products named in News Plaintiffs’ complaints, and involves hundreds of potential new custodians given that the back-end code was written by an entirely new team.” In other words, Microsoft argues, the new Copilot is so different as to be irrelevant to the original allegations.
Plaintiffs, however, dispute this, noting that Microsoft’s own statements confirm the use of GPT-4o—the same cutting-edge LLM at issue in the suit—and that in practical terms, the AI assistant performs similar functions: using news content for generative responses, potentially siphoning away readers who might otherwise have clicked through to publisher websites. Their legal counsel argues that withholding documents relating to the consumer Copilot “hamstrings” their ability to investigate and rebut Microsoft’s core “fair use” defense, since new versions of the product could perpetuate the same allegedly infringing behaviors but with a shield from scrutiny.
The New York Times and its co-plaintiffs argue that the unlicensed use of their content not only violates their copyrights, but results in real competitive harm: AI tools that can answer newsworthy questions with paraphrased or summarized versions of their work reduce the need for users to visit the original news sites. This, they contend, undermines digital advertising, subscription revenue, and the foundational business logic of public-interest journalism.
Microsoft and OpenAI maintain that their use qualifies as “fair use,” a legal doctrine that permits limited unlicensed use of copyrighted material for transformative purposes such as commentary, research, or education. They argue that their models do not “reproduce” or display articles verbatim as a matter of design, and that the mere use of news content in the model’s training falls under transformative use, benefiting society by advancing the development of AI.
This doctrine, however, is notoriously gray, especially as applied to generative AI. No U.S. court has yet squarely resolved whether the large-scale ingestion of news content to train an LLM—later capable of producing similar language and facts on demand—falls within fair use or crosses into actionable infringement.
Technical sources and independent reporting confirm that, beginning in late 2024, Microsoft’s consumer Copilot featured:
Discovery, as a process, is both costly and dangerous for large tech firms: turning over internal emails, code documentation, technical specifications, and product strategy memos can expose embarrassing admissions or clues to willful infringement, and potentially create precedent for broader liability in the sector.
The plaintiffs’ push to include the consumer Copilot in discovery stems from their need to understand whether Microsoft changed its approach to copyright after the original complaint, or simply rebranded and redeployed the same essential AI functionality. Their filings cite as evidence Microsoft’s own admission that the backend is powered by GPT-4o—already central to the litigation. If the new Copilot exhibits the same capabilities and risks, then withholding discovery would, in their view, allow Microsoft to evade scrutiny simply by organizational reshuffling.
This commercial truce set a new benchmark. Licensing deals not only generate revenue for publishers but also provide AI companies with legal certainty. For the New York Times, this underscores their willingness to negotiate for value, rather than simply object to AI on principle.
Whether Microsoft eventually pursues a similar licensing arrangement could depend on the outcomes of this case, as well as their appetite to defend fair use at the highest legal level. For other publishers, especially those without the Times’ negotiating power, the precedent established here may determine whether they have meaningful leverage in future licensing discussions.
For Microsoft, the stakes are not just legal and financial, but also reputational and strategic. The outcome will affect not only Copilot but the broader relationship between AI developers and the creators of the digital commons. A balanced, sustainable solution will require compromise: robust licensing agreements where appropriate, technical measures to avoid unlawful reuse of publisher content, and continued court clarification of what counts as “fair use” in the AI age.
The months ahead will likely see further wrangling over the reach of discovery and, possibly, the emergence of more negotiated licensing deals between publishers and technology companies hoping to avoid litigation. But until the courts settle the central questions at stake—how copyright applies to AI, when publishers must be paid, and how much secrecy companies like Microsoft can maintain in product development—both sides face an uncertain, high-stakes battle that will shape the next era of AI and journalism.
Source: GeekWire Microsoft tries to keep its consumer Copilot out of New York Times AI copyright case
The Genesis of an AI Copyright Battle
The roots of this lawsuit stretch back to December 2023 when The New York Times, together with Daily News LP (parent company of the New York Daily News) and the Center for Investigative Reporting, filed a federal suit in the Southern District of New York. Their central allegation remains straightforward but weighty: Microsoft and its close partner OpenAI, the creator of ChatGPT, engaged in the mass, unauthorized scraping of copyrighted journalism to fuel their cutting-edge AI systems, diverting readers and undercutting the financial sustainability of original reporting.This confrontation, by no means unique, is emblematic of a broader reckoning facing the tech and media industries as powerful large language models (LLMs) ingest unimaginable quantities of digital text—including premium journalism—to learn the contours of human language. The stakes are significant, as the outcome could shape both the business models and ethical boundaries for artificial intelligence in the information age.
Microsoft, OpenAI, and the “Copilot” Question
Microsoft’s partnership with OpenAI is one of the technology sector’s most defining alliances in recent years. With billions invested, the companies are joined not just by resources, but by functionality as OpenAI’s models rely on Microsoft’s Azure cloud infrastructure for training and deployment. Out of this synergy, Microsoft has built a suite of AI-driven products—including their Copilot line—which now spans both business and consumer applications.The business version, integrated with Microsoft 365, first grabbed headlines as it brought AI-generated assistance into productivity suites, offering features like document summarization, schedule coordination, and intelligent email drafting. However, it is the newer consumer-focused Copilot that lies at the heart of the current legal gambit.
Launched in October 2024, the consumer Copilot was born from a newly-assembled team under the leadership of Mustafa Suleyman—one of the most respected figures in AI, previously a co-founder of Google’s DeepMind and, until recently, chief of AI startup Inflection AI. Suleyman’s arrival at Microsoft in March 2024, along with several Inflection AI colleagues, was widely seen as a coup, signaling Microsoft’s intent to lead not just in enterprise AI but in seamless, personalized consumer experiences.
Consumer Copilot, unlike its business sibling, brought a redesigned user interface and new features, such as personalized daily news summaries, natural voice interactions, and the ability to serve as a digital “companion” while browsing the web. These deep integrations with consumer-facing media experiences have put the tool directly in the crosshairs of news organizations concerned about content reuse and loss of audience.
The Battle Lines: Discovery and the Scope of the Suit
As the legal drama unfolds, the current dispute centers on what in legal terms is known as “discovery”—the process by which parties to a lawsuit can demand the production of documents and evidence from the other side. The plaintiffs want access to technical details and internal discussions around consumer Copilot, arguing that Microsoft’s latest product is relevant to the lawsuit because it utilizes OpenAI’s GPT-4o model, just like earlier products already named in the complaint.Microsoft, for its part, is fighting to keep the focus of discovery strictly on older iterations, contending in a federal court filing that the revised consumer Copilot “did not exist at the time News Plaintiffs filed their complaints, is built on a different platform with new system architecture than the products named in News Plaintiffs’ complaints, and involves hundreds of potential new custodians given that the back-end code was written by an entirely new team.” In other words, Microsoft argues, the new Copilot is so different as to be irrelevant to the original allegations.
Plaintiffs, however, dispute this, noting that Microsoft’s own statements confirm the use of GPT-4o—the same cutting-edge LLM at issue in the suit—and that in practical terms, the AI assistant performs similar functions: using news content for generative responses, potentially siphoning away readers who might otherwise have clicked through to publisher websites. Their legal counsel argues that withholding documents relating to the consumer Copilot “hamstrings” their ability to investigate and rebut Microsoft’s core “fair use” defense, since new versions of the product could perpetuate the same allegedly infringing behaviors but with a shield from scrutiny.
AI Models and Copyright: The Crux of the Debate
The central legal question remains unresolved: Do AI models built on massive, arguably indiscriminate ingestion of published journalism constitute copyright infringement, either in the training process or in the generation of responses? From a technical perspective, large language models require high-volume, high-quality data to provide contextually accurate outputs. News articles—rich in synthesized information, professionally verified facts, and nuanced language—are among the most coveted sources.The New York Times and its co-plaintiffs argue that the unlicensed use of their content not only violates their copyrights, but results in real competitive harm: AI tools that can answer newsworthy questions with paraphrased or summarized versions of their work reduce the need for users to visit the original news sites. This, they contend, undermines digital advertising, subscription revenue, and the foundational business logic of public-interest journalism.
Microsoft and OpenAI maintain that their use qualifies as “fair use,” a legal doctrine that permits limited unlicensed use of copyrighted material for transformative purposes such as commentary, research, or education. They argue that their models do not “reproduce” or display articles verbatim as a matter of design, and that the mere use of news content in the model’s training falls under transformative use, benefiting society by advancing the development of AI.
This doctrine, however, is notoriously gray, especially as applied to generative AI. No U.S. court has yet squarely resolved whether the large-scale ingestion of news content to train an LLM—later capable of producing similar language and facts on demand—falls within fair use or crosses into actionable infringement.
Technical Realities: What Sets Consumer Copilot Apart?
According to Microsoft, the revamped consumer Copilot differs markedly from its predecessors. Following the appointment of Mustafa Suleyman, the consumer division undertook a total overhaul, building the new Copilot on what Microsoft calls a "different platform with new system architecture.” The back-end code was purportedly written from scratch by a newly assembled team, many hailing from Inflection AI. The resulting product, the company claims, represents not just a revised app, but a fundamentally new system that should fall outside the scope of the original litigation.Technical sources and independent reporting confirm that, beginning in late 2024, Microsoft’s consumer Copilot featured:
- A redesigned interface tailored for daily engagement rather than productivity tasks.
- Personalized news summaries curated by AI, automatically generated from a user's preferred sources.
- Voice-first interactions, making the assistant accessible through speech as well as text.
- “Web companion” capabilities—an overlay or side panel that surfaces relevant information, suggestions, and summaries as the user browses the internet.
- Integration of GPT-4o, the latest advancement in OpenAI’s family of large language models, emphasizing richer conversational abilities and up-to-date knowledge acquisition.
Legal Strategies and the Importance of “Discovery”
At this stage, Microsoft’s legal strategy hinges on narrowing the relevance—and therefore the scope—of what it must disclose. Discovery battles are often as significant as the underlying issues, as they determine what evidence plaintiffs can gather regarding internal AI model decisions, engineering priorities, and potential acknowledgment of the risks of copyright infringement.Discovery, as a process, is both costly and dangerous for large tech firms: turning over internal emails, code documentation, technical specifications, and product strategy memos can expose embarrassing admissions or clues to willful infringement, and potentially create precedent for broader liability in the sector.
The plaintiffs’ push to include the consumer Copilot in discovery stems from their need to understand whether Microsoft changed its approach to copyright after the original complaint, or simply rebranded and redeployed the same essential AI functionality. Their filings cite as evidence Microsoft’s own admission that the backend is powered by GPT-4o—already central to the litigation. If the new Copilot exhibits the same capabilities and risks, then withholding discovery would, in their view, allow Microsoft to evade scrutiny simply by organizational reshuffling.
Competitive and Commercial Implications
The legal fight arrives amid intensifying competition in AI-powered information assistants. Microsoft’s Copilot faces rivals from Google, Meta, Amazon, and a host of fast-moving startups. One revealing development came earlier in 2025, when Amazon reached a landmark agreement to license The New York Times’ editorial content for use in its AI platforms—a deal reportedly worth at least $20 million annually.This commercial truce set a new benchmark. Licensing deals not only generate revenue for publishers but also provide AI companies with legal certainty. For the New York Times, this underscores their willingness to negotiate for value, rather than simply object to AI on principle.
Whether Microsoft eventually pursues a similar licensing arrangement could depend on the outcomes of this case, as well as their appetite to defend fair use at the highest legal level. For other publishers, especially those without the Times’ negotiating power, the precedent established here may determine whether they have meaningful leverage in future licensing discussions.
Strengths and Weaknesses of Microsoft’s Approach
Strengths:- Innovative Team and Leadership: Under Mustafa Suleyman’s stewardship, Microsoft’s consumer AI division has been energized by elite talent and fresh technical vision, drawing from both DeepMind and Inflection AI. This allows them to quickly deploy new features, iterate on design, and leapfrog slow-moving competitors.
- Architectural Overhaul: Microsoft’s insistence on a rebuilt platform and codebase represents an attempt to “future-proof” the product both technically and (potentially) legally. Modular system design, new user interfaces, and state-of-the-art LLMs help the company argue that the product is meaningfully distinct from legacy systems and, by extension, from legacy legal liabilities.
- Alignment with Consumer Trends: The push to offer AI that acts not just as a productivity assistant but as a genuine personal companion—with conversational, context-aware, and web-integrated abilities—reflects actual consumer demand for AI that is ever-present and adaptive, not just confined to the office.
- Flexible Market Response: By splitting Copilot into business and consumer tracks, Microsoft can more easily isolate risk and respond to future regulatory developments without endangering its core enterprise revenue.
- Legal Exposure: Despite architectural changes, Microsoft cannot entirely evade the fact that Copilot’s outputs—summarizing and restating news stories—remain functionally similar to prior iterations. As courts become increasingly sophisticated in AI adjudication, cosmetic or even substantive technical changes may not immunize products from a finding of liability if the user impact is the same.
- Discovery Vulnerability: Should the courts side with the plaintiffs on discovery, Microsoft faces the risk of public scrutiny over internal practices, including whether (and how thoroughly) copyright and publisher interests were discussed or deprioritized during product development.
- Unsettled Copyright Doctrine: The legal uncertainty surrounding AI and fair use remains profound. A negative ruling could mandate retroactive licensing costs or even require fundamental changes to how AI models are trained on public data. This would ripple through not just Microsoft but the entire AI industry.
- Potential Market Fragmentation: By requiring deals with some publishers but not others, the legal and commercial environment could become fragmented. Smaller outlets may be left out, further concentrating power among tech giants and mega-publishers who can negotiate from a position of strength.
Where Does This Leave the AI Ecosystem?
The Microsoft-New York Times litigation is more than just a narrow business dispute; it is a proxy war over the value of journalism in a world increasingly dominated by synthetic content. The decisions reached, both in discovery and on the merits of the case, will send shockwaves through every corner of the news and technology worlds.For Microsoft, the stakes are not just legal and financial, but also reputational and strategic. The outcome will affect not only Copilot but the broader relationship between AI developers and the creators of the digital commons. A balanced, sustainable solution will require compromise: robust licensing agreements where appropriate, technical measures to avoid unlawful reuse of publisher content, and continued court clarification of what counts as “fair use” in the AI age.
Conclusion: Navigating a Murky Future
As of now, no definitive ruling has yet emerged to answer the core copyright question. Microsoft’s aggressive defense—and its attempt to shield its consumer Copilot from discovery—reflects both the company’s commercial calculations and the broader uncertainty facing the industry. For news organizations, meanwhile, the case is a vital stand not just for their immediate business interests, but for the principle that original reporting should not be freely exploited to train the very tools that might replace it.The months ahead will likely see further wrangling over the reach of discovery and, possibly, the emergence of more negotiated licensing deals between publishers and technology companies hoping to avoid litigation. But until the courts settle the central questions at stake—how copyright applies to AI, when publishers must be paid, and how much secrecy companies like Microsoft can maintain in product development—both sides face an uncertain, high-stakes battle that will shape the next era of AI and journalism.
Source: GeekWire Microsoft tries to keep its consumer Copilot out of New York Times AI copyright case
