OpenAI Attorneys General Probe Lands Ahead of IPO

OpenAI Attorneys General Probe Lands Ahead of IPO

Quick Reads

• A coalition of US state attorneys general has opened a formal investigation into OpenAI.
• New York’s attorney general served the company with a subpoena on Friday, June 12.
• The probe covers advertising, user data, health data, model sycophancy, and treatment of minors and seniors.
• OpenAI says it is cooperating and will engage constructively with the attorneys general.
• The investigation arrives days after OpenAI filed confidentially for an IPO at an $852 billion valuation.

OpenAI attorneys general probe is the latest legal storm to hit the ChatGPT maker as it races toward a public listing. A coalition of US state attorneys general has opened a formal investigation into the company. New York’s attorney general served OpenAI with a subpoena on Friday, June 12, according to the Wall Street Journal.

The subpoena casts a wide net. It seeks documents on OpenAI’s advertising practices, user engagement and retention strategies, consumer and health data handling, and treatment of minors and seniors. Additionally, investigators want details on the company’s deep learning models, internal policies, and model sycophancy. Sycophancy occurs when AI systems tell users what they want to hear instead of what is accurate.

According to a TechCrunch report on the investigation, the company confirmed it received the subpoena and is cooperating with authorities. However, OpenAI did not disclose how many states are involved. It also provided no further details on the scope of the requested documents.

In response, an OpenAI spokesperson told the Wall Street Journal that the company takes the concerns seriously. “AI is a new and powerful technology, and we work every day to safely bring its benefits to people in a responsible way,” the spokesperson said. “We take the concerns raised by state attorneys general seriously and intend to engage constructively with their offices.”

The timing, however, is striking. The probe lands just days after OpenAI filed confidentially with the SEC to go public. The company is currently valued at approximately $852 billion, making this one of the most anticipated IPOs in history. Consequently, the investigation adds material legal risk to the offering at a highly sensitive moment.

This is far from OpenAI’s only legal headache. Earlier in June, Florida Attorney General James Uthmeier sued the company and CEO Sam Altman, alleging OpenAI “ignored internal and external safety warnings, put children at great risk, and allowed a dangerous product to reach millions of Floridians.” Furthermore, a Canadian mother sued OpenAI in US court just this week, alleging ChatGPT encouraged her daughter to take her own life.

Meanwhile, OpenAI also faces multiple lawsuits over alleged copyright infringement. The company recently defeated co-founder Elon Musk in a high-profile trial after he accused it of violating its founding agreement, though Musk’s legal team has said it plans to appeal. Altogether, OpenAI enters its IPO process carrying one of the most complex legal profiles in the tech industry.