Business
Column: The AI industry has a battle-tested plan to keep using our content without paying for it
This time in 2023, the world was in thrall to the rise of OpenAI’s dazzling chatbot. ChatGPT was metastasizing like a fungal infection, amassing tens of millions of users a month. Multibillion-dollar partnerships materialized, and investments poured in. Big Tech joined the party. AI image generators like Midjourney took flight.
Just a year later, the mood has darkened. The surprise sacking and rapid reinstatement of OpenAI Chief Executive Sam Altman gave the company an embarrassing emperor-has-no-clothes moment. Profits are scarce across the sector, and computing costs are sky high. But one issue looms large above all and threatens to bring the fledgling industry back to earth: Copyright.
The legal complaints that cropped up throughout last year have grown into a thundering chorus, and the tech companies say they now present an existential threat to generative AI (the kind that can produce writing, pictures, music and so on). If 2023 was the year the world marveled at AI content generators, 2024 may be the year that the humans who created the raw materials that made that content possible get their revenge — and maybe even claw back some of the value built on their work.
In the last days of December, the New York Times filed a bombshell lawsuit against Microsoft and OpenAI, alleging that “millions of its articles were used to train automated chatbots that now compete with the news outlet as a source of reliable information.” The Times’ lawsuit joins a host of others — class-action lawsuits filed by illustrators, by the photo service Getty Images, by George R.R. Martin and the Author’s Guild, by anonymous social media users, to name a few — all alleging that companies that stand to profit from generative AI used the work of writers, reporters, artists and others without consent or compensation, infringing on their copyrights in the process.
Our experiments make it all but certain that these systems are in fact training on copyrighted material.
— Cognitive scientist Gary Marcus
Each of these lawsuits have their merits, but the Gray Lady’s entrance into the arena changes the game. For one thing, the Times is influential in shaping national narratives. For another, the Times lawsuit is uniquely damning; it’s loaded with example after example of how ChatGPT replicates news articles nearly verbatim, and offers the responses to its paying customers, free of attribution.
It’s not just the lawsuits: The heat is getting turned up by Congress, researchers and AI experts too. On Wednesday, a congressional hearing saw senators and media industry representatives agree that AI companies should pay licensing fees for the material they use to train their models. “It’s not only morally right,” said Sen. Richard Blumenthal (D.-Conn.), who chairs the subcommittee that held the hearing, according to Wired. “It’s legally required.”
Meanwhile, a fiery study recently published in IEEE Spectrum, co-written by the cognitive scientist and AI expert Gary Marcus and the film industry veteran Reid Southern, shows that Midjourney and Dall-E, two of the leading AI image generators, were trained on copyrighted material, and can regurgitate that material at will — often without even being prompted to.
“Our experiments make it all but certain that these systems are in fact training on copyrighted material,” Marcus told me, something that the companies have been coy about copping to explicitly. “The companies have been far from straightforward in what they’re using, so it was important to establish that they are using copyrighted materials.” Also important: that the copyright-infringing works come spilling out of the systems with little prodding. “You don’t need to prompt it, to say ‘make C3P0’ — you can just say ‘draw golden droid.’ Or ‘Italian plumber’ — it will just draw Mario.”
This has serious implications for anyone using the systems in a commercial capacity. “The companies whose properties are infringed — Mattel, Nintendo — are going to take an interest in this,” Marcus says. “But the user is left vulnerable too — There’s nothing in the output that says what the sources are. In fact the software isn’t capable of doing that in a reliable way. So the users are on the hook and have no clue as to whether it’s infringing or not.”
There’s also a sense of momentum that’s beginning to build behind the simple notion that creators should be compensated for work that’s being used by AI companies valued at billions or tens of billions — or hundreds of billions of dollars, as Google and Microsoft are. The notion that generative AI systems are at root “plagiarism machines” has become increasingly widespread among their critics, and social media is teeming with opprobrium against AI.
But those AI companies aren’t likely to relent. We saw a foreshadowing of how the AI companies would respond to copyright concerns at large last year, when famed venture capitalist and AI evangelist Marc Andreessen’s firm argued that AI companies would go broke if they had to pay copyright royalties or licensing fees. Just this week, British media outlets reported that OpenAI has made the same case, seeking an exemption from copyright rules in England, claiming that the company simply couldn’t operate without ingesting copyrighted materials.
“Because copyright today covers virtually every sort of human expression — including blogposts, photographs, forum posts, scraps of software code, and government documents — it would be impossible to train today’s leading AI models without using copyrighted materials,” OpenAI argued in its submission to the House of Lords. Note that both Andreessen and OpenAI’s statements underscore the value of copyrighted work in arguing that AI companies shouldn’t have to pay for it. What can they do about it?
First, they’re pleading poverty. There’s just too much material out there to compensate everyone who contributed to making their system work and to making their valuation go through the roof. “Poor little rich company that’s valued at $100 billion can’t afford it,” Marcus says. “I don’t know how well that’s going to wash, but that’s what they’re arguing.”
The AI companies also argue what they’re doing falls under the legal doctrine of fair use — probably the strongest argument they’ve got — because it’s transformative. This argument helped Google win in court against the big book publishers when it was copying books into its massive Google Books database, and defeat claims that YouTube was profiting by allowing users to host and promulgate unlicensed material.
Next, the AI companies argue that copyright-violating outputs like those uncovered by Marcus, Southern and the New York Times are rare or are bugs that are going to be patched.
“They say, ‘Well this doesn’t happen very much. You need to do special prompting.’ But the things we asked it were pretty neutral — and we still got” copyrighted material, Marcus says. “This is not a minor side issue — this is how the systems are built. It is existential for these companies to be able to use this amount of data.” Finally, aside from just making arguments in court and in statements, the AI companies are going to use their ample resources to lobby behind the scenes and throw their power around to help make their case.
Again, the generative AI industry isn’t making much money yet — last year was essentially one massive product demo to hype up the technology. And it worked: The investment dollars did pour in. But that doesn’t mean the AI companies have figured out ways to build a sustainable business model. They’re already operating under the assumption that they will not pay for things such as training materials, licenses or artists’ labor.
Of course, it is in no way true that the likes of Google, Microsoft, or even OpenAI cannot afford to pay to use copyrighted works — but Silicon Valley is at this point used to cutting labor and the cost of creative works out of the equation, and has little reason to think it would not be able to do so again. From Uber to Spotify, the business models of many of this century’s biggest tech companies have been built on the assumption that labor costs could be cut out or minimized. And when creative industries argued that YouTube allowed pirated and unlicensed materials to proliferate at the workers’ expense, and backed the Stop Online Piracy Act (SOPA) to fight it, Google was instrumental in stopping the bill, organizing rallies and online campaigns, and lobbying lawmakers to jump ship.
William Fitzgerald, a partner at the Worker Agency and former member of the public policy team at Google, tells me he sees a similar pressure campaign taking shape to fight the copyright cases, one modeled on the playbook Google has used successfully in the past: Marshaling third-party groups and organs such as the Chamber of Progress to push the idea that using copyrighted works for generative AI is not just fair use, but something that’s being embraced by artists themselves, not all of whom are so hung up on things like wanting to be paid for their work. He points to a pro-generative AI open letter signed by AI artists, that was, according to one of the artists involved, organized by Derek Slater, a former Google policy director whose firm works with Google — the same person who took credit for organizing the anti-SOPA efforts. Fitzgerald also sees Google’s fingerprints on Creative Commons’ embrace of the argument that AI art is fair use, as Google is a major funder of the organization.
“It’s worrisome to see Google deploy the same lobbying tactics they’ve developed over the years to ensure workers don’t get paid fairly for their labor,” Fitzgerald said. And OpenAI is close behind. It is not only taking a similar approach to heading off copyright complaints as Google, but it’s also hiring the same people: It hired Fred Von Lohmann, Google’s former director of copyright policy, as its top copyright lawyer. “It appears OpenAI is replicating Google’s lobbying playbook,” he says. “They’ve hired former Google advocates to affect the same playbook that’s been so successful for Google for decades now.”
Things are different this time, however. There was real grassroots animosity against SOPA, which was seen at the time as engineered by Hollywood and the music industry; Silicon Valley was still widely beloved as a benevolent inventor of the future, and many didn’t see how having an artist’s work uploaded to a video platform owned by the good guys on the internet might be detrimental to their economic interests. (Though many did!)
Now, however, workers in the digital world are better prepared. Everyone from Hollywood screenwriters to freelance illustrators to part-time copywriters to full-time coders can recognize the potential material effect of a generative AI system that can ingest their work, replicate it, and offer it to users for a monthly fee — paid to a Silicon Valley corporation, not them.
“It’s asking for an enormous giveaway,” Marcus says. “It’s the equivalent of a major land grab.”
Now, there are many in Silicon Valley who are of course genuinely excited about the potential of AI, and many others who are genuinely oblivious to matters of political economy; who want to see the gains made as quickly as possible, and do not realize how these work-automating systems will be used in practice. Others may simply not care. But for those who do, Marcus says there’s a simple way forward. “There’s an obvious alternative here — OpenAI’s saying that we need all this or we can’t build AI — but they could pay for it!” We want a world with artists and with writers, after all, he adds, one that rewards artistic work — not one where all the money goes to the top because a handful of tech companies won a digital land grab.
“It’s up to workers everywhere to see this for what it is, get organized, educate lawmakers and fight to get paid fairly for their labor,” Fitzgerald says. “Because if they don’t, Google and OpenAI will continue to profit from other people’s labor and content for a long time to come.”
Dear Mr. Pelley:
I meant what I said in my letter last week to the 60 Minutes team: joining 60 Minutes is the honor of my career and I am grateful to be working alongside the people who have contributed to the most important television journalism brand this country has ever produced. While I’m new to 60 Minutes, I’ve devoted my career to investigative journalism and storytelling. I started this job excited to collaborate and to benefit from the wisdom and experience of the 60 Minutes veterans, with you among them. For that reason, one of the first things I did in my new role was call you to talk and invite you to dinner. It is a profound disappointment that you rejected that overture and chose ambush instead. Yesterday, you hijacked my first meeting with staff to disparage me, my qualifications, and my intentions with remarkable incivility and contempt. I welcome a diversity of viewpoints and respectful debate among the team, but this was nothing of the sort. Yesterday’s performative display of hostility enacted in front of the staff instead of in a civil, private conversation-demonstrated that you have no interest in contributing to the future success of the show, or approaching my new tenure with a mind open to collaboration and progress. I am here to deliver first-in-class news programming, not to make headlines about newsroom drama. I am eager to work alongside those who share this goal.
Despite yesterday’s misconduct, I had hoped that in sitting down with you today we could find a path forward together. You made clear that you are not interested in such a path.
Your antipathy to the future of the show has come through loud and clear. And I have heard you. I therefore write on behalf of CBS News, Inc. (“CBS”) to inform you that your employment with CBS is terminated for cause effective immediately. Enclosed is your formal termination letter.
Sincerely,
Nick Bilton
Executive Producer, 60 Minutes
The co-founder of Aspiration, Joseph Sanberg, was sentenced to 14 years in prison on Monday after defrauding investors and lenders of over $248 million.
The startup, an eco-friendly digital banking company boasting fossil fuel-free investments, carbon offsets for gas purchases, and a debit card with cash-back benefits for shopping at clean companies, was founded by Sanberg and Andrei Cherny. Cherny left the company in 2022 and has not been charged.
Sanberg, an Orange County native, pleaded guilty to wire fraud in October after being arrested in March last year. Aspiration subsequently filed for bankruptcy and liquidated all of its assets by July.
Sanberg and venture capitalist Ibrahim AlHusseini, who also faces charges, together forged a series of bank statements in order to obtain loans. From 2020 to 2021, the pair forged AlHusseini’s bank statements to show millions of dollars in assets in order to obtain millions of dollars from lenders.
Additionally, they forged a letter from their audit committee stating that $250 million in funds were available, when in reality Aspiration had less than $1 million. The amount of loans defrauded exceeded $248 million.
In 2021, Sanberg artificially inflated Aspiration’s 2021 revenue by $44 million by recruiting 27 fake customers to sign letters of intent pledging tens of thousands of dollars per month for tree planting services. Sanberg himself funded the contracts and used the inflated revenue numbers to obtain more loans.
The charges sparked an NBA investigation into salary cap allegations due to Aspiration’s connections with Clippers owner Steve Ballmer.
Ballmer personally invested $60 million in Aspiration, all of which was lost. He is now the target of a civil lawsuit alleging his participation in the scheme. Ballmer denies the allegations.
The team announced a $300-million sponsorship deal with Aspiration, and Clippers player Kawhi Leonard signed a four-year, $28-million marketing contract with the company, which reportedly performed no duties. The issue has raised concerns about how players are circumventing the NBA’s salary cap.
The team lost the $300-million sponsorship deal and an additional $20 million paid for carbon offset purchases.
Residents in the city of Monterey Park will be the first in the nation to vote on a permanent ban on data centers Tuesday.
If approved, Measure NDC would prohibit data centers within the city limits and could only be overturned by another vote.
Yard signs saying “No Data Center” in English and Chinese with images of dragons line sidewalks in the San Gabriel Valley city.
As a wave of data center opposition sweeps the country, numerous towns and counties across the U.S. have instituted temporary moratoria and other restrictions on the facilities. But only a handful have instituted indefinite bans, and just four other towns have sent related matters to the ballot.
Supporters are hoping the vote will set a precedent for the rest of the region, where residents are fighting proposals in Vernon and City of Industry.
“This is about as permanent a ban as we can get,” said Steven Kung, co-founder of the group No Data Center Monterey Park. “Winning Measure NDC would send a huge message to the rest of the San Gabriel Valley about how residents don’t want data centers.”
The ballot measure emerged from the fight against a 247,000-square-foot center proposed in 2024 by the Australian-owned investment firm HMC StratCap for a residential area in Monterey Park.
The facility would have sat less than 500 feet away from the nearest home and used three times the electricity of the 60,000-person, predominantly Asian American city.
While the developer touted the potential for jobs and tax revenue, residents expressed concerns about noise and air pollution, rising electricity rates and a potential to lower property values.
The company pulled its plans in late March following public outcry and a March 4 city council vote to extend a temporary data center moratorium and place a ban on Tuesday’s ballot.
In a letter to the city council, HMC StratCap said it would pursue a different use for the land and would not engage in a ballot measure fight.
The city council later banned data centers indefinitely, the first in California to do so, said Mayor Elizabeth Yang. But she’s still been out campaigning for the measure with all four other council members.
“If a council puts in an ordinance, a future council can reverse it too,” said Yang. “With the ballot measure, unbanning it is a lot harder because you need the entire city to vote on it.”
The measure proposes the ban “to protect air quality, drinking water resources, and public health” and “prevent impacts to electricity and water rates.”
While California places third in the country for existing data centers with about 300 facilities, it hasn’t been a hot spot in the recent AI-driven data center boom. High electricity rates, expensive land and regulatory hurdles mean that fewer, and smaller, facilities are currently planned than in Virginia, Texas, Georgia, Illinois or Arizona.
“Most of California’s data centers are small by today’s standards,” said Shaolei Ren, an engineering professor at UC Riverside who studies how to reduce the environmental impacts of data centers. “Ten years ago, they would be medium-sized, but the power demand for new AI data centers has increased a lot.”
The average operating data center demands 45 megawatts, according to the Washington Post, while the average planned one would draw 430 MW. The one proposed for Monterey Park would have required about 50 MW at peak demand.
As proposals crop up in SoCal, they’re met with fierce opposition. Montebello, El Monte and Baldwin Park have all enacted temporary moratoria, and Alhambra recently banned data centers as part of a zoning code update. City of Industry, Vernon, City of Commerce and Santa Fe Springs are moving in the other direction, trying to court developers and streamline data center approvals. Community groups are fighting that.
Outside the San Gabriel Valley, residents of Coachella and Imperial County are showing up in droves to protest local proposals.
Matthew Shaw, a volunteer with the Coalition for Responsible Data Center Development, who recently published a report on opposition to AI data centers, said a vote to ban them in Monterey Park “would lead to copycats, partially because so many groups are just opposed to any data center development at all.”
While there is no formal opposition to Measure NDC, some building trades like Ironworker Local 433 supported the Monterey Park data center when it was still live before city council. Those in the data center industry are lamenting the state of public opinion.
“These are multi-billion-dollar assets that are built by multi-trillion-dollar companies. These things will get done,” said Mehdi Paryavi, chairman of the International Data Center Authority. “My biggest problem is that our industry does not invest enough in community engagement.”
Paryavi said towns that seek to limit data centers are missing out on thousands of jobs generated by data center construction, operations and customers, as well as faster artificial intelligence speeds and better performance.
Kung said local community organizers are “looking at the empirical evidence” and seeing a ban as a win.
“We’ve never seen a city that embraces a data center and is like, ‘Look how our quality of life has increased, look how all the revenue has gone into citywide improvements,’” he said. “That just doesn’t exist.”
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