A U.S. federal judge has handed artificial intelligence startup Anthropic a decisive legal win, ruling that the company’s use of copyrighted books to train its AI model, Claude, falls under fair use and is “quintessentially transformative.”

The judgment, issued Monday by Judge William Alsup of the Northern District of California, is being hailed as a pivotal moment in the growing legal clash between content creators and AI developers.

The decision not only clears a major legal hurdle for Anthropic—backed by Amazon—but also provides crucial legal clarity for the broader generative AI industry, where similar lawsuits are stacking up against companies like OpenAI, Meta, and Google. It may serve as a precedent in determining whether using copyrighted material for machine learning constitutes infringement or is protected by law.

Training AI is ‘Like Any Reader Aspiring to Be a Writer’

“The purpose and character of using copyrighted works to train LLMs to generate new text was quintessentially transformative,” Judge Alsup wrote in his ruling. “Like any reader aspiring to be a writer.”

In his opinion, Alsup noted that the plaintiffs—authors Andrea Bartz, Charles Graeber, and Kirk Wallace Johnson—failed to show that Anthropic’s Claude model directly reproduced their work’s “creative elements,” or mimicked any of their “identifiable expressive style.”

This, he said, means the large language models (LLMs) do not offer “market substitutes” for the original books and are not infringing on the authors’ rights. Alsup emphasized that using books to train AI systems to generate new and original outputs fits squarely within the doctrine of fair use.

Significance for Other AI Lawsuits, Including OpenAI vs. New York Times

The implications of the ruling stretch far beyond Anthropic.

OpenAI, for instance, is currently embroiled in a high-profile lawsuit filed by The New York Times, which claims its articles were used without permission to train ChatGPT. The media outlet alleges copyright violations and demands compensation or licensing agreements.

Judge Alsup’s decision is likely to be cited as a defense model in that case and others like it. AI developers will likely argue that if Claude’s training on copyrighted books is transformative and covered by fair use, then similar practices used by OpenAI and others should also be considered lawful.

Plaintiffs Claim “Massive Theft” of Books

The lawsuit against Anthropic was filed last August and accused the company of building a “multibillion-dollar business by stealing hundreds of thousands of copyrighted books.” The authors cited the inclusion of their work in a cache of roughly 7 million books that they say Anthropic used to create a centralized training dataset.

Although Alsup upheld Anthropic’s defense regarding model training, he left one critical issue unresolved. A separate trial will be held to determine whether the company improperly retained and used pirated books to build that dataset—and if so, whether damages should be awarded.

“That Anthropic later bought a copy of a book it earlier stole off the internet will not absolve it of liability for the theft,” Alsup wrote. “But it may affect the extent of statutory damages.”

Anthropic Welcomes Ruling as a Win for Innovation

Anthropic praised the court’s decision, calling it a validation of its practices.

“We are pleased with the ruling, which is consistent with copyright’s purpose in enabling creativity and fostering scientific progress,” a spokesperson said in a statement.

The company, founded by former OpenAI researchers, is among a handful of startups vying for dominance in the next wave of AI development. Its Claude model has been positioned as a rival to OpenAI’s ChatGPT and Google’s Gemini.

As AI Copyright Battles Intensify

There is a flood of copyright-related lawsuits against AI companies. In addition to the New York Times case, comedian Sarah Silverman and other authors have sued OpenAI and Meta for using their written works. Getty Images and various record labels are also seeking legal remedies for what they claim is unauthorized use of their intellectual property in training AI systems.

But the Alsup ruling could shift the momentum.

Some legal experts note that while it doesn’t settle all disputes over AI and copyright, it creates a clearer framework: If a model is not outputting recognizable or plagiarized content, and its use of copyrighted material is to build something fundamentally new, courts may view that as fair use.

Microsoft is going all-in on Copilot, its enterprise-focused AI chatbot, but the tech giant is encountering resistance where it matters most: in the hands of users who still prefer ChatGPT.

While both AI tools are powered by OpenAI’s models—including GPT-4 and its successors—Microsoft’s vision of embedding Copilot into its productivity suite has run into stiff headwinds. According to a recent Bloomberg report, Microsoft’s sales team is struggling to convince businesses why they should choose Copilot over ChatGPT, even though the company has a multibillion-dollar stake in OpenAI and exclusive licensing rights to its models.

Microsoft has pitched Copilot as a natural extension of the Microsoft 365 experience. It’s cheaper in some cases, tightly integrated into Word, Excel, Teams, and Outlook, and backed by Microsoft’s long-standing enterprise infrastructure. Yet, many companies are bypassing Copilot for ChatGPT, citing better usability, flexibility, and brand familiarity.

ChatGPT has become the public face of generative AI. It was the first AI tool many employees and developers experimented with. As a result, organizations are seeing internal demand for ChatGPT licenses even when Copilot is technically available.

OpenAI claims to have over 3 million paying enterprise customers, while Microsoft has reported that “multiple dozens” of clients have more than 100,000 Copilot users—translating to a minimum floor of around 2.4 million licenses, but with less transparency.

The Cracks in a $13 Billion Partnership

Beneath the commercial rivalry between Copilot and ChatGPT lies a more serious issue: Microsoft and OpenAI are at odds over the future of their $13 billion partnership.

According to sources familiar with ongoing talks, Microsoft is prepared to walk away from high-stakes negotiations with OpenAI unless new terms meet or exceed existing ones. The tech giant is signaling that it’s content to continue under its current agreement—which guarantees exclusive access to OpenAI’s models until 2030—without committing to additional investments or concessions.

At the heart of the tension is OpenAI’s structural overhaul. The company is trying to formally convert from a nonprofit-capped entity into a for-profit public-benefit corporation. This transformation is critical to its ambitions to raise more capital, potentially go public, and retain investor momentum.

However, Microsoft’s consent is legally required for the restructuring to proceed. And Microsoft, according to insiders, is increasingly skeptical of any deal that would reduce its leverage over OpenAI’s commercial outputs.

One of the biggest sticking points is revenue sharing. Microsoft currently receives 20% of OpenAI’s revenue, capped at $92 billion. But OpenAI is reportedly pushing to reduce that share to as little as 10% by 2030. Reducing Microsoft’s stake could help OpenAI appeal to a broader base of investors, but Microsoft views such a move as eroding its return on a massive financial outlay.

While Microsoft is rumored to have discussed taking up to 49% equity in a restructured OpenAI, no deal has been finalized, and the software giant is wary of trading down its current advantageous licensing rights for uncertain future stakes.

Microsoft insiders argue that public markets and shareholders care less about equity in OpenAI and more about monetized, exclusive access to foundational AI infrastructure—a benefit the company already enjoys.

What’s Next for Copilot?

The fractures in the Microsoft–OpenAI relationship come at a delicate time for both firms. Microsoft is banking on Copilot as its anchor product for AI monetization, having integrated it into Windows 11, GitHub, Azure, and across the Microsoft 365 suite. It’s also bundling Copilot into premium subscription tiers and pushing enterprise clients to adopt it at scale.

Meanwhile, OpenAI continues to expand its reach directly through ChatGPT Enterprise, Team, and API products—positioning itself less like a backend model provider and more like a full-stack software vendor.

This overlapping ambition now threatens to place the two companies on a collision course, even as they remain intertwined through Azure and licensing agreements.

Despite these headwinds, Microsoft’s financials remain robust. Its stock hit an all-time high of $491.76 this week, before closing at $490.40, up 0.85%. Investors are still bullish on Microsoft’s long-term AI positioning, but questions remain about how sustainable the current partnership model with OpenAI truly is.

AI Loyalty vs. AI Delivery

The struggle between Copilot and ChatGPT is not just a product rivalry—it’s a reflection of how quickly AI has become embedded in organizational behavior. Microsoft has deeper enterprise relationships, but OpenAI has captured the imagination of users at scale.

Unless the companies resolve their strategic rift, Microsoft risks investing heavily in an ecosystem that may ultimately compete with its own offerings. Meanwhile, OpenAI must navigate the tension of being both Microsoft’s partner and its biggest competitor in the generative AI space.

The robotaxi wars are entering a new phase, with Uber and Alphabet’s Waymo officially launching autonomous ride-hailing services in Atlanta—just as Tesla begins testing its own low-cost driverless cars in Austin.

Waymo’s driverless Jaguar I-PACE electric SUVs, equipped with its proprietary Waymo Driver technology, are now available to the public in Atlanta through the Uber app. The rollout covers roughly 65 square miles of the metro area, though it currently excludes highways and the airport.

The service is the latest expansion in a partnership that began last year and has since extended to Austin, where it launched in March.

Waymo vehicles in Atlanta will operate without any human safety driver on board—a key differentiator from Tesla’s robotaxi rollout in Austin, which includes a Tesla employee in the passenger seat to manually shut down the car if necessary. Unlike Tesla’s vehicles, Waymo’s robotaxis utilize a full suite of lidar, radar, and vision sensors to interpret the driving environment, offering a more redundant safety architecture.

Tesla’s Aggressive Entry and Price Edge

Tesla officially began limited testing of its robotaxi service in Austin over the weekend, offering rides to a select group of invitees. The fleet consists of 10 to 20 Model Y SUVs equipped with Tesla’s latest self-driving software. The company is charging a flat rate of $4.20 per ride—dramatically undercutting competitors like Uber and Lyft, whose fares typically range from $25 to $40 for similar routes in urban settings.

Wedbush analyst Dan Ives, a longtime Tesla bull, called the Austin pilot a foundational moment and predicted that Tesla’s robotaxis could operate in 25 to 30 cities by 2026. He believes this phase could contribute as much as $1 trillion to Tesla’s valuation, calling it one of the most pivotal chapters in the company’s autonomous ambitions.

“There are countless skeptics of the Tesla robotaxi vision, with many bears thinking this day would never come,” Ives said. “But after taking two rides in Austin, it’s clear this is the future.”

Lyft’s Missing in The Momentum

While Uber is leaning heavily into its Waymo partnership, Lyft has fallen behind in the race. The company, which previously tested autonomous ride pilots with Motional and others, has not announced any major driverless expansion plans recently. Analysts see this lag as a potential threat to Lyft’s relevance as robotaxi services begin scaling in major U.S. cities.

Investor Sentiment and Market Impact

Uber shares rose 7.5% on Tuesday following the Atlanta announcement. The stock is now up more than 50% year-to-date, compared to a 3% gain in the Nasdaq. Investors are betting that Uber’s integration with Waymo could help it streamline costs and reduce dependency on human drivers in the long run.

Tesla’s stock also jumped 8.2% earlier this week following its robotaxi test kickoff in Austin, signaling investor enthusiasm for its aggressive pricing model and vertical integration.

Both Tesla and Waymo are pushing aggressively to scale their services beyond pilot programs. Waymo currently has over 1,500 autonomous vehicles in its U.S. fleet and operates in San Francisco, Los Angeles, Phoenix, Austin, and now Atlanta. Tesla CEO Elon Musk has claimed he expects “millions” of robotaxis on the road by the second half of 2026—though critics point to his history of overpromising on timelines.

However, analysts believe that Tesla’s disruptive pricing strategy could force competitors to reconsider their fare structures, while Waymo and Uber’s partnership offers a blend of technological maturity and platform scale. The next few quarters will be crucial as these players move from tightly controlled tests to broader commercial operations.

Meanwhile, Lyft, once a key player in autonomous vehicle ambitions, is noticeably absent from this race.