Nearly 400 newspaper publishers have filed a lawsuit against Microsoft and OpenAI, alleging the companies unlawfully copied and used their copyrighted articles to train the large language models behind their AI products without permission or compensation. The legal action, filed in the U.S. District Court for the Southern District of New York, claims the practice violates federal copyright law. The publishers argue that their journalism is protected by copyright and that utilizing it to train AI models necessitates authorization and payment.

Microsoft and OpenAI are partners in the development and deployment of AI systems designed to generate text-based responses. The plaintiffs are requesting a court ruling that the alleged unauthorized use constitutes copyright infringement. Additionally, they are seeking an injunction to prevent further use of their content by the technology firms.

This lawsuit contributes to a growing series of legal challenges initiated by publishers, authors, and various content creators. As courts deliberate on the application of copyright law to AI models trained on publicly available and copyrighted material, the outcome of this case could set a significant precedent.

Other technology companies are facing similar scrutiny regarding their AI training practices. In March, Grammarly encountered a lawsuit concerning its alleged use of an Expert Review AI tool. Julia Angwin, a contributing opinion editor at The New York Times, alleged that the tool utilized her name and the names of others without prior consent.

Furthermore, Anthropic, the AI entity responsible for the Claude chatbot, is currently facing legal action from music rights management company BMG. BMG asserts that Anthropic used lyrics from major artists to train its chatbot without securing the necessary authorization.

Microsoft Corp (NASDAQ: MSFT) shares fell 3.90% to $351.22 on Thursday, hitting a new 52-week low as Stifel analyst Brad Reback maintained a Hold rating and lowered the price target to $400 from $415. The revision reflects concerns over fiscal 2027 gross margin expectations, which Stifel believes do not fully account for the impact of Azure’s rapid expansion and rising capital spending squeezing cloud margins.

Stifel’s model projects fiscal 2027 gross margins will decline approximately 450 basis points from the prior year to roughly 63%. The firm attributes this shift to Azure growing nearly three times faster than the rest of the company, with its gross margin expected to compress by 100 to 150 basis points each quarter through fiscal 2027. Additionally, the firm suggests Wall Street’s fiscal 2027 EPS estimate of about $19.45 may be roughly $1.00 too high, noting that rising finance lease obligations could weigh on earnings per share growth despite management targeting double-digit operating income growth.

Technical indicators reinforce the bearish outlook. The stock is trading 12.7% below its 20-day simple moving average, 14.6% below its 50-day average, 12.6% below its 100-day average, and 21.7% below its 200-day average. The Relative Strength Index (RSI) stands at 28.85, indicating selling pressure has reached stretched levels. The stock is down 28.63% over the past year, with key resistance identified at $413.00.