Users join forces to sue Microsoft: "Secret agreement" with OpenAI monopolizes computing power, leading to inflated ChatGPT prices

According to Zhitong Finance APP, Microsoft (MSFT.US) is facing a new consumer class action lawsuit. The plaintiffs accuse the tech giant of illegally inflating the market prices of generative artificial intelligence products through a secret agreement with ChatGPT developer OpenAI.

The proposed class action has been filed in the federal court in San Francisco. The lawsuit claims that Microsoft, through its exclusive cloud computing partnership with OpenAI, has restricted the supply of computing resources necessary to run ChatGPT. To date, Microsoft's investment in OpenAI has exceeded $13 billion.

The lawsuit points out that the partnership agreement Microsoft reached with OpenAI in the early stages of its development has violated federal antitrust laws by limiting market competition and artificially raising the subscription prices for ChatGPT, while also harming the product experience of millions of users on the AI platform.

The lawsuit also mentions that although the so-called restrictions on OpenAI were later relaxed, these restrictions still hang over OpenAI like the "sword of Damocles" from one of its main competitors.

Microsoft stated in a statement that it is currently reviewing the lawsuit but "we firmly believe that our partnership with OpenAI promotes competition, drives innovation, and supports the responsible development of AI technology."

OpenAI, which is not named as a defendant, declined to comment. The legal team representing the 11 plaintiff consumers also did not immediately respond to requests for comment.

It is understood that in 2019, Microsoft first announced a $1 billion investment in San Francisco-based OpenAI and stated that the two parties had established a long-term partnership to jointly develop AI supercomputing technology on Microsoft's Azure cloud computing platform.

OpenAI was founded in 2015 as a non-profit organization and has since restructured into a for-profit company.

The lawsuit claims that Microsoft is profiting from its partnership with OpenAI while simultaneously developing its own competitive products, including the AI platform Copilot.

The lawsuit also points out that during the industry price war earlier this year, the pricing of ChatGPT was significantly higher than that of competing products.

Additionally, the lawsuit mentions that the so-called restrictions on OpenAI were only partially lifted after it began procuring computing power from Google (GOOGL.US) in June of this year.

The plaintiffs are seeking damages for Microsoft's "illegal price increases" since the launch of ChatGPT in November 2022 and are requesting the court to order Microsoft to refrain from re-implementing the related restrictions