Unsealed court filings reveal a Microsoft executive privately called AI training "the largest theft of labor in history" while the company and OpenAI scraped paywalled New York Times content, undermining their public fair-use defense in a landmark copyright case
Executive summary: Newly unsealed court filings in the New York Times copyright lawsuit against OpenAI and Microsoft reveal a Microsoft executive privately called AI training "the largest theft of labor in human history" while both companies scraped paywalled Times content and internally warned the practice would gut publishers. The admission undermines the defendants' fair-use defense, increases exposure to statutory damages, and could force industry-wide licensing agreements for AI training data, raising costs for model developers and creating revenue streams for publishers.
Who is involved: Microsoft, OpenAI, The New York Times, U.S. District Court for the Southern District of New York.
Likely next: Further unsealing of depositions and internal communications; summary-judgment briefing expected in Q4 2026; potential settlement talks if discovery worsens defendants' position.
Newly unsealed documents in the New York Times lawsuit against OpenAI and Microsoft show a Microsoft manager describing the firms' data-collection practices as historic labor theft. The revelation contradicts the companies' public stance that training on copyrighted works is fair use and may strengthen the Times' claim for willful infringement. The case is shaping up as a pivotal test of whether generative AI developers must license training data at scale.
What's next — scenarios
Base: Courts require licensing for copyrighted training data; Microsoft/OpenAI settle with publishers (50%)
New recurring revenue for publishers; AI model training costs rise; compliance infrastructure becomes a competitive moat.
- Summary-judgment ruling on fair use (Q4 2026)
- Public announcement of licensing deals with major news publishers
Upside: Fair use upheld; defendants win on summary judgment (25%)
Status quo continues; AI training proceeds without mandatory licensing; legal uncertainty lifts for model providers.
- Court opinion finding transformative use outweighs market harm
- Denial of plaintiffs' motion for partial summary judgment on willfulness
Downside: Statutory damages awarded; injunction forces model retraining on licensed data only (25%)
Billions in damages; months-long delay in AI product releases; scramble to secure licensed datasets.
- Jury verdict finding willful infringement
- Court grants injunction requiring retraining or data excision
What to watch
- Next filing deadline in NYT v. OpenAI/Microsoft (docket nos. 1:23-cv-11195, 1:24-cv-XXXX)
- U.S. Copyright Office report on AI training and fair use (expected late 2026)
- Microsoft and OpenAI earnings calls for disclosure of litigation reserves or licensing spend
- EU AI Act Article 53 transparency obligations for general-purpose AI models (effective Aug 2026)
Timeline
- — Manager di Microsoft: “L'addestramento dell'Ia è il più grande furto di lavoro della storia” (la Repubblica — Economia)
- — Microsoft exec called AI scraping 'the largest theft of labor in human history,' new unredacted filings reveal (TechCrunch)
Analysis — what this means
Likely next events
- Summary-judgment briefing completion in NYT v. OpenAI/Microsoft (Q4 2026)
- U.S. Copyright Office AI training guidance release (late 2026)
Sectors affected
- Generative AI model providers
- News publishing and digital media
- Legal tech and copyright compliance services
Regulatory implications
- Potential precedent on fair use for AI training in U.S. federal courts
- EU AI Act Article 53 transparency obligations for training data sources
Historical parallels
- Authors Guild v. Google (2015) — fair use for transformative book scanning
- A&M Records v. Napster (2001) / MGM v. Grokster (2005) — commercial use of copyrighted works without license
Key entities
Sources
- Manager di Microsoft: “L'addestramento dell'Ia è il più grande furto di lavoro della storia” — la Repubblica — Economia
- Microsoft exec called AI scraping 'the largest theft of labor in human history,' new unredacted filings reveal — TechCrunch
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