Microsoft-Backed OpenAI In Hot Water, Faces Privacy Law Violation Charges In Italy
Portfolio Pulse from Ananya Gairola
OpenAI, backed by Microsoft Corporation (NASDAQ:MSFT), is facing charges of privacy law violations in Italy. The Italian privacy regulator has concluded that ChatGPT's data collection methods infringe upon the country's privacy laws. OpenAI has 30 days to respond to the findings. This adds to the existing privacy controversies surrounding ChatGPT. In March 2023, Italy banned ChatGPT over privacy concerns but provided conditions for resuming operations in April 2023. OpenAI experienced internal turmoil in November 2023 with the firing and reinstatement of CEO Sam Altman, and in December, introduced a 'Preparedness Framework' to grant the board authority over Altman's decisions.
January 30, 2024 | 1:37 am
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Microsoft Corporation, as a backer of OpenAI, may face reputational risks and potential financial implications due to the privacy law violation charges against OpenAI in Italy.
Microsoft's association with OpenAI means that any legal or regulatory issues faced by OpenAI could indirectly affect Microsoft's reputation and potentially its financials. The privacy law violation charges in Italy could lead to negative sentiment among investors in the short term, possibly impacting MSFT's stock price negatively. However, the extent of the impact may be moderated by Microsoft's size and diversified operations.
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