OpenAI Execs Called AI 'Existential Threat' to Publishers

Internal communications from OpenAI and Microsoft executives reveal stark acknowledgments that their AI products pose fundamental threats to news publishers' business models, according to newly unsealed court filings in The New York Times' copyright lawsuit.

Nick Turley, OpenAI's head of ChatGPT, wrote that publishers face an "existential threat" from OpenAI's products, which he described as "largely substitutive, period" and likely to become "more and more substitutive as they get better." Microsoft CEO Satya Nadella testified that chatbot conversations have "substituted" for sending users to underlying sources, instead "giving you the information right there on the website on the AI platform."

The documents, unsealed last Thursday, also show Microsoft recorded 83-93% drops in click-through rates for The New York Times and Daily News domains when comparing traditional Bing Search with its Copilot chatbot.

Why it matters

These admissions directly undermine the fair use defense that OpenAI and Microsoft have mounted against copyright claims. In U.S. copyright law, fair use requires that new works be transformative rather than substitutive. When executives describe their own products as substitutes for the original journalism, they effectively concede a key element publishers must prove. The case could establish whether AI companies must pay for training data or can continue treating published content as free fuel for commercial products.

Paywall circumvention raises legal stakes

Evidence that OpenAI bypassed paywalls moves the dispute beyond fair use gray areas into potential violation of the Digital Millennium Copyright Act, according to privacy expert Alan Chapell, founder of Chapell and Associates. "Going behind paywalls is a 'really big deal' both legally and morally," Chapell said, noting that such circumvention "almost always" defeats a fair-use defense.

The filings also reveal that a licensing market for AI training already existed between Microsoft and OpenAI, with content explicitly priced and traded. David Buttle, founder of publisher AI licensing coalition Spur, pointed out that OpenAI, Microsoft, Amazon, Google, Meta, Perplexity and Mistral have all signed publisher licensing deals covering similar content and uses. "The defendants' own conduct establishes that the content has a market price," Buttle said. "The case is about their refusal to pay it to these plaintiffs."

Implications for the AI licensing market

If courts rule in favor of The New York Times, particularly on paywall circumvention and substitution claims, the decision could force AI companies into structured licensing agreements with publishers. Danielle Coffey, CEO of News/Media Alliance, said publishers would be ready either to file additional lawsuits or collectively negotiate licensing deals once legal certainty exists.

"Once that's answered, I think it will be an across-the-board acknowledgement from the AI companies that they do need to come to the table," Coffey said, predicting that collective licensing would be offered at scale on a usage-based model.

Both sides have requested summary judgment, asking the judge to resolve key issues without a jury trial. More unsealed documents are expected in coming months as legal teams challenge redactions.

These details were first reported by Digiday.