Anthropic Settles Copyright Suit

Wired Magazine reports that the class action copyright suit involving Anthropic in the Northern District of California (Bartz v. Anthropic) has been settled (for the most part) for around $1.5 billion US.  The article is available, here.  

The practical implications of the settlement on positioning in other copyright suits involving generative artificial intelligence remain to be seen.  In June, Judge Alsup issued an order stating, in part:

. . . This order grants summary judgment for Anthropic that the training use was a fair use. And, it grants that the print-to-digital format change was a fair use for a different reason. But it denies summary judgment for Anthropic that the pirated library copies must be treated as training copies.

We will have a trial on the pirated copies used to create Anthropic's central library and the resulting damages, actual or statutory (including for willfulness). That Anthropic later bought a copy of a book it earlier stole off the internet will not absolve it of liability for the theft but it may affect the extent of statutory damages. Nothing is foreclosed as to any other copies flowing from library copies for uses other than for training LLMs.

U.S. FTC: Unpacking Technology Companies Acquisition of AI-related Technologies

The U.S. Federal Trade Commission is gathering information from major technology companies regarding their acquisition of technology from other companies concerning artificial intelligence.  The FTC press release states:

The Federal Trade Commission announced today that it issued orders to five companies requiring them to provide information regarding recent investments and partnerships involving generative AI companies and major cloud service providers.

The agency’s 6(b) inquiry will scrutinize corporate partnerships and investments with AI providers to build a better internal understanding of these relationships and their impact on the competitive landscape.  The compulsory orders were sent to Alphabet, Inc., Amazon.com, Inc., Anthropic PBC, Microsoft Corp., and OpenAI, Inc.

“History shows that new technologies can create new markets and healthy competition. As companies race to develop and monetize AI, we must guard against tactics that foreclose this opportunity, “said FTC Chair Lina M. Khan. “Our study will shed light on whether investments and partnerships pursued by dominant companies risk distorting innovation and undermining fair competition."

The FTC issued its orders under Section 6(b) of the FTC Act, which authorizes the Commission to conduct studies that allow enforcers to gain a deeper understanding of market trends and business practices. Findings stemming from such orders can help inform future Commission actions.

Companies are deploying a range of strategies in developing and using AI, including pursuing partnerships and direct investments with AI developers to get access to key technologies and inputs needed for AI development. The orders issued today were sent to companies involved in three separate multi-billion-dollar investments: Microsoft and OpenAI, Amazon and Anthropic, and Google and Anthropic. The FTC’s inquiry will help the agency deepen enforcers understanding of the investments and partnerships formed between generative AI developers and cloud service providers.

The FTC is seeking information specifically related to:

• Information regarding a specific investment or partnership, including agreements and the strategic rationale of an investment/partnership.
• The practical implications of a specific partnership or investment, including decisions around new product releases, governance or oversight rights, and the topic of regular meetings.
• Analysis of the transactions’ competitive impact, including information related to market share, competition, competitors, markets, potential for sales growth, or expansion into product or geographic markets.
• Competition for AI inputs and resources, including the competitive dynamics regarding key products and services needed for generative AI.  
• Information provided to any other government entity, including foreign government entities, in connection with any investigation, request for information, or other inquiry related to these topics.

The companies will have 45 days from the date they receive the order to respond.

The Commission voted 3-0 to issue the Section 6(b) orders and conduct the study of AI investments and partnerships.