A fresh legal storm has hit Microsoft, as a group of consumers in San Francisco federal court allege the tech titan manipulated the AI market to inflate prices for ChatGPT.
The proposed class action claims Microsoft leveraged its exclusive cloud computing agreement with OpenAI to control access to the computational resources that power the popular AI platform. Critics say this deal, inked in OpenAI’s early days, stifled competition, raised subscription costs, and compromised product quality for millions.
Though some restrictions have eased, the lawsuit warns they still hang over OpenAI like a “sword of Damocles,” wielded by one of its main competitors. Microsoft insists its partnership fosters innovation, competition, and responsible AI development, while OpenAI has declined to comment.
Microsoft’s involvement with OpenAI dates back to 2019, when it announced a $1 billion investment to build AI supercomputing on its Azure cloud. OpenAI, initially a nonprofit, later restructured into a for-profit entity. The lawsuit alleges Microsoft exploited this arrangement to profit from OpenAI’s rise while prepping its own AI offerings, such as Copilot.
Plaintiffs argue ChatGPT’s prices spiked well above rival platforms during earlier price battles and note that partial relief came only in June when OpenAI began buying compute power from Google. The case seeks compensation for overcharges dating to ChatGPT’s November 2022 debut and a court order preventing Microsoft from reinstating restrictive controls.
The case is Samuel Bryant et al v. Microsoft Corp, Northern District of California, No. 3:25-cv-08733.
