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Microsoft Must Face California Antitrust Claims Over OpenAI Deal
A California federal judge let state antitrust claims against Microsoft proceed over its OpenAI computing agreement. The judge dismissed ChatGPT subscribers’ federal claim with leave to amend and rejected Microsoft’s bid to send the case to
AI.info Team · Written with AI ·
A federal judge let California antitrust claims against Microsoft proceed over its $13 billion partnership with OpenAI, while dismissing ChatGPT subscribers’ federal claim with leave to amend. The September 28 ruling keeps the case alive under California law but does not decide whether Microsoft violated it. U.S. District Judge P. Casey Pitts also rejected Microsoft’s effort to send the proposed class action to arbitration.
Why the federal claim fell short
The plaintiffs allege that Microsoft’s agreement with OpenAI restricted the startup’s access to computing capacity, limiting its products and helping keep ChatGPT prices high. They argue that the companies’ arrangement harmed subscribers and competition in consumer generative AI. Those are allegations in the complaint, not findings that the agreement had those effects.
Pitts dismissed the claim under the federal Sherman Act because the subscribers had not adequately alleged the kind of antitrust injury federal law requires. He gave them leave to amend, allowing another attempt to plead the claim. The ruling therefore narrows the case for now; it does not permanently bar a federal claim.
“A contractual constraint inhibiting one competitor’s ability to compete does not amount to an antitrust injury absent a broader harm to the market’s ability to provide consumers a full range of options.”
U.S. District Judge P. Casey Pitts
California claims remain in play
The judge allowed the plaintiffs’ claims under California’s Cartwright Act and Unfair Competition Law to proceed, according to the Daily Journal. Those claims give the subscribers a state-law route to continue challenging Microsoft’s alleged role in restricting OpenAI’s computing options. Their survival means the court has not accepted Microsoft’s request to end the lawsuit at the pleading stage.
The distinction between the federal and state claims is significant to the case’s next steps. The plaintiffs must still prove their allegations, and Microsoft can contest the claims as litigation continues. The order does not establish that consumers paid inflated prices or that the partnership reduced competition.
Arbitration will not end the court case
Microsoft also asked Pitts to compel arbitration, but the judge denied that motion. The suit, brought by ChatGPT subscribers as a proposed class action, can therefore continue in federal court on the surviving state claims. The ruling leaves the plaintiffs with a live case even as the federal antitrust theory faces a possible rewrite.
The complaint frames the dispute around control of computing capacity: it alleges that Microsoft’s contractual position could limit OpenAI’s ability to buy compute elsewhere and, in turn, affect the service available to ChatGPT customers. The court has not ruled that this account is true. The immediate questions are whether the plaintiffs will amend their Sherman Act claim and how they will support the California claims as the case moves forward.