Newly unsealed court documents show that Microsoft CEO Satya Nadella acknowledged under oath that conversing with AI chatbots has substituted for visiting news websites directly, a statement that legal experts say could significantly damage the company's defense against copyright infringement claims. The revelation came as part of discovery materials in a lawsuit filed by the New York Times and eight other news organizations accusing OpenAI and Microsoft of using millions of articles without permission to train their AI systems.

What Did Satya Nadella Say in Court?

According to the court filings made public on September 17, Nadella testified that using chatbots "has substituted... giving you the information right there on the AI platform versus needing to go to the underlying source". This admission directly contradicts the legal argument that both companies have been making in federal court. Microsoft and OpenAI have claimed that their AI training on copyrighted news articles qualifies as "fair use" because it transforms the material into new content and does not compete with or replace journalism.

Nadella

The lawsuit, originally filed in 2023, centers on whether AI systems can legally use copyrighted material to train their models without permission. The case is being heard in Manhattan federal court before US District Judge Sidney Stein. The news organizations argue that the companies knew their AI products would directly substitute for journalism, making fair-use protection impossible.

How Are Other Microsoft and OpenAI Executives Implicated?

Nadella's testimony is not the only problematic statement uncovered in the discovery process. The court filings also revealed comments from other company leaders that news outlets say undermine the fair-use defense:

• Greg Brockman, OpenAI Co-Founder: Wrote that large language models (LLMs, or AI systems trained on vast amounts of text) are "particularly good at predicting text of news articles" and "excellent at news," and responded positively when told employees had found a "hack" to bypass the New York Times' paywall.
• Nick Turley, Head of ChatGPT: Stated that publishers face an "existential threat" from AI products, which are "largely substitutive" and "will get more and more substitutive as they get better".
• Brent Hecht, Microsoft Director of Applied Science: Said that "millions of people" would consider AI companies "hoovering up" all their work to be "an astonishing theft of unprecedented proportions".

Steven Lieberman, an attorney representing the New York Daily News and seven other newspapers in the case, stated that the evidence "shows that OpenAI and Microsoft knew that what they were doing was wrong".

What Is Microsoft's Response to These Revelations?

Microsoft has attempted to minimize the impact of Nadella's testimony and other executives' comments. A Microsoft spokesperson said in a statement that "Satya's testimony and Microsoft's position in this case are perfectly consistent," arguing that he was speaking to "broad principles and changes underway in how people find and consume information" rather than making a legal argument about copyright.

"Those observations should not be confused with conclusions about copyright questions before the Court, which Microsoft addresses in its filings," the spokesperson stated.

Microsoft Spokesperson

Regarding Brent Hecht's comments about "astonishing theft," Microsoft said the remarks "reflect one employee's individual perspective, are not a legal analysis, and do not represent the company's views". OpenAI did not immediately respond to requests for comment on the filing.

Why Does This Matter for the Broader AI Industry?

The copyright case against OpenAI and Microsoft is closely watched because it will likely set a precedent for how courts interpret fair use in the context of AI training. The Trump administration has supported the AI companies, filing a brief on September 1 stating that AI training is "extraordinarily" transformative. However, dozens of other copyright infringement complaints have been filed against tech companies by various content creators and publishers, all hinging on similar fair-use questions.

The core legal question is whether AI systems that learn from copyrighted material to generate new content qualify for fair-use protection. The news organizations argue that when executives privately acknowledge their AI products substitute for the original content, the companies cannot claim their use is transformative. Judge Sidney Stein will ultimately decide whether the evidence presented in these court filings is sufficient to dismiss the case or allow it to proceed to trial.

The outcome could reshape how AI companies approach training data acquisition and whether they will need to negotiate licensing agreements with content creators before using their work to build AI systems.