NYT - Wall Street Lunch: NYT Microsoft And Open AI In Copyright Dispute

2023-12-27 12:15:00 ET

Summary

• The New York Times sues Microsoft and OpenAI for allegedly using its content to train AI models without permission or compensation.
• iPhone and Apple Watch design chief to join former Apple exec Sir Jony Ive at his LoveFrom design firm.
• Health care sector upgraded to market weight from underweight by Citi Research.

Listen below or on the go on Apple Podcasts and Spotify

The paper alleges the companies illegally used its content to train AI models. (0:15) Chinese stocks fall below a major long-term support level. (1:46) Apple iPhone design chief said to join Jony Ive at new firm. (2:56)

This is an abridged transcript of the podcast.

Our top story today so far

The New York Times (NYSE: NYT ) is suing Microsoft ( MSFT ) and OpenAI for copyright infringement , alleging the companies have illegally used the newspaper's content to train artificial intelligence models.

The lawsuit, filed in Federal District Court in Manhattan, alleges millions of articles from The Times were used to train the AI models.

“Times journalism is the work of thousands of journalists, whose employment costs hundreds of millions of dollars per year,” the paper said in its complaint. “Defendants have effectively avoided spending the billions of dollars that The Times invested in creating that work by taking it without permission or compensation.”

The lawsuit comes amid an impasse in negotiations between The Times, Microsoft, and OpenAI over how to come to an "amicable resolution" in the use of intellectual property in generative AI technology. The Times said it first approached the companies in April in an effort to resolve the matter.

The lawsuit comes days after a group of 11 nonfiction writers joined a lawsuit in Manhattan federal court alleging OpenAI and Microsoft misused their books to train the AI models.

In September, OpenAI was sued in a New York federal court by a number of authors, including George R.R. Martin and John Grisham, over alleged copyright infringement.

In today’s trading

Stocks are trading mostly sideways, with volume seasonally low. The S&P ( SP500 ) still has a good shot, though, at extending its weekly winning streak to the end of the year.

The bond market is more active. Rates continue to decline, with the 10-year Treasury yield ( US10Y ) moving below 3.85% and the 2-year yield ( US2Y ) falling below 4.30%.

In Asia, Chinese stocks fell below a long-term technical support level . The December bar of the monthly chart of the Shanghai Composite Index ( SHCOMP ) fell below a support level that has held since 2005.

Albert Edwards, a global strategist at Societe Generale who calls himself an "uber bear," says: "If I were a chartist... I would be concerned.”

"They say the stock market often bears no resemblance to the health of the economy. But in China's case, it does!"

Among active stocks

Softbank ( SFTBY ) says it will receive shares of T-Mobile ( TMUS ) valued at about $7.59 billion at no additional cost. SoftBank said it notified T-Mobile US to issue ~48.75 million shares based on the Dec. 22 closing price as a part of the merger agreement when the wireless carrier merged with rival Sprint in 2020.

First Wave BioPharma ( FWBI ) surged after announcing a non-binding deal with an unnamed biopharma company to sell its rights to a prescription drug called niclosamide for the treatment of inflammatory bowel diseases.

And Iovance Biotherapeutics ( IOVA ) slumped after the FDA placed its Phase 2 trial for experimental lung cancer therapy LN-145 on clinical hold following a fatal adverse event.

In other news of note

Tang Tan, the Apple ( AAPL ) executive and design chief for the company's iPhone and Apple Watch, is slated to join former Apple executive Sir Jony Ive at his LoveFrom design firm.

At LoveFrom, Tan will work on artificial intelligence hardware, many of which are in the early stages. Also involved in the project is OpenAI Chief Executive Sam Altman, who is said to provide LoveFrom with software for the projects.

Tan will join LoveFrom in February, according to Bloomberg. Earlier this month, it was reported that Tan was stepping down from his role at Apple.

And in the Wall Street Research Corner

We looked at the top tech picks from the Citi equity team yesterday. Now let’s cast an eye on healthcare.

Citi upgraded the defensive sector to Market Weight from Underweight for 2024. And Big Pharma is the swing factor.

Analysts say earnings remain positive in healthcare equipment and services, with valuations and profitability as tailwinds.

But pharma, biotech, and life sciences are driving enthusiasm, with positive earnings for several names after performance has lagged.

Among the top picks for expected total return are Bristol-Myers (BMY), Arcus Biosciences (RCUS), and Schrodinger (SDGR).

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