Microsoft Director Called AI Scraping 'Largest Theft of Labor'

Internal Documents Expose AI Industry Concerns

Court filings in The New York Times' ongoing copyright lawsuit against OpenAI and Microsoft have surfaced internal communications showing senior executives at both companies recognized the profound economic harm their AI models could inflict on content creators—even as they publicly defended their data collection practices.

According to 404 Media, which reviewed the legal brief, Microsoft director of Applied Science Brent Hecht wrote in a January 2023 internal memo that "millions of people around the world will soon consider large models 'hoovering up' all their work to be an astonishing theft of unprecedented proportions." He characterized it as "the largest theft of labor in human history." Another Microsoft document acknowledged that "almost no one intended for content they created to be used in this fashion, nor are they compensated for its use."

The documents, which remain sealed or redacted at the companies' request, form the basis of The New York Times' motion for summary judgment in the case filed in late 2023.

Quantifying the Impact on Publishers

Microsoft's own data revealed the concrete damage to news organizations. When ChatGPT gained widespread adoption in 2023, click-through rates from Microsoft's Copilot to The New York Times dropped by as much as 93% compared to traditional Bing search results. Hecht described this dynamic as a "doom loop" that would "hurt the performance of our models and the entire web at the same time."

He noted the unusual economic structure: "It is highly unusual that an end-product threatens the economic foundations of its essential suppliers, but that is the situation we have created for our LLM business with respect to its 'content supply chain.'"

OpenAI Leadership Acknowledged Substitution Effect

OpenAI Head of ChatGPT Nick Turley stated in internal communications that the chatbot represents an "existential threat" to publishers because responses are "largely substitutive" and "will get more and more substitutive as they get better." Another OpenAI engineer testified that "no matter how prominently we show the links, users won't click."

The brief also cited an exchange where OpenAI researcher Nick Ryder informed company president Greg Brockman about a "hack to get around nytimes paywall," to which Brockman replied, "ah nice."

Why It Matters

These revelations could significantly undermine the AI industry's "fair use" defense in copyright litigation. While one court recently ruled that Anthropic's use of published material qualifies as fair use under U.S. law, that determination hinges partly on whether the use affects "the potential market for or value of the copyrighted work." Internal acknowledgments that AI models substitute for original sources and devastate publisher traffic directly address this criterion.

Microsoft CEO Satya Nadella stated in a 2024 deposition that "anything that is paywalled should be licensed by anyone who wants to use it…for grounding or training." He added that had he known OpenAI scraped paywalled content, he would have required the company "to retrain its models."

These details were first reported by 404 Media based on legal briefs filed in the ongoing New York Times lawsuit.