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Tech Stocks Update: Microsoft’s AI Lawsuit & Apple’s Watch Bans

Plus500 | Thursday 28 December 2023

Tech giants Microsoft and Apple have made less-than-stellar headlines lately as they undergo lawsuits for various reasons. While Apple continues to grapple with the Masimo trial, Microsoft’s AI ventures face some regulatory troubles from the New York Times. 

Here’s what you need to know about the latest big tech updates:

An image of an AI trial

Microsoft’s AI Lawsuit

Microsoft (MSFT) is no stranger to the Artificial Intelligence (AI) field and has invested heavily in AI technology. Among one of Microsoft’s main AI ventures is the former’s investments in OpenAI's technology since 2019. Evidently, OpenAI’s famous ChatGPT application is even integrated into Microsoft’s products.  

In addition, the company has developed many of its own AI products in order to stay at the forefront of this burgeoning market.

While these efforts have served the tech behemoth’s business model and may have driven its stock upward (as proven in many of the company’s earnings releases), on Wednesday, December 27, Microsoft made the AI headlines again, but this time for a less optimistic reason. 

It was revealed that the New York Times has sued both Microsoft and OpenAI for alleged violations of copyrights, marking the first leading US media company to take legal action against these AI companies. 

The media giant contends that Microsoft and OpenAI have used its intellectual property—an issue reportedly raised by The New York Times in April. Nevertheless, according to the former, these concerns were met with no resolution.

To be precise, the NY Times believes that Microsoft and ChatGPT are allowing readers to access content without paying for it, hence affecting the company’s subscription revenues. In addition, Microsoft’s ChatGPT-powered Bing search engine is allegedly providing results derived from the NY Times’ website without providing credit or a link to the article. 

Moreover, whereas the lawsuit does not state the amount of money that Microsoft and OpenAI should pay, the New York Times stated that these companies should be accountable for “billions of dollars in statutory and actual damages.” 

Since the beginning of 2023 and up until Wednesday, Microsoft's stock has gained 56.2%. Only time will tell what the results of these regulatory pressures will yield and how Microsoft’s share price will react. 

Microsoft price chart from the beginning of 2023 until December 28

More AI Lawsuits

The above-mentioned lawsuit wasn’t the only one to cause a buzz this year. In addition to the NY Times lawsuit, OpenAI, GitHub, and Microsoft are being sued by computer experts who contend that their codes are being used in the training of Copilot, an AI-based on cloud computing.

About a month ago, OpenAI’s CEO Sam Altman was sacked and then rehired, hence leading to OpenAI’s employees threatening to quit. 

Furthermore, in general, the AI industry has undergone regulatory scrutiny as even Hollywood actors and actresses have filed lawsuits against Meta (META) and OpenAI. For example, back in July, Margret Atwood, Philip Pullman, and Sarah Silverman signed a letter stating that AI companies should recompense them for their work. Later on, in September, George R.R. Martin, the Game of Thrones writer, filed a copyright lawsuit against OpenAI. 

Apple’s Lawsuit Update

iPhone-maker Apple (APPL) is also facing a lawsuit against medical tech company, Masimo (MASI) whereby the International Trade Commission (ITC) granted the letter a cease-and-desist of Apple’s famous watches that use the Blood Oxygen feature. 

According to this lawsuit, Masimo claimed that Apple infringed its Blood Oxygen feature. As such, Apple was ordered to halt sales on its Apple Watch Series 9 and Apple Watch Ultra 2 watches. 

Nonetheless, on Wednesday, the ban on Apple’s flagship watches was temporarily paused by the appeals court, thus allowing the company to temporarily sell smartwatches again. 

The tech giant even stated that “Apple Watch Series 9 and Apple Watch Ultra 2, including the blood oxygen feature, will become available for purchase again in the United States at Apple Stores starting today and from apple.com tomorrow by 12 pm PT.” On the flip side, Masimo did not issue any statements or comments on that matter. 

As the outcomes of these legal proceedings remain uncertain, it is believed that the results can yield substantial financial ramifications for both entities, thus increasing the possibility of substantial capital losses. 

Following the announcement, perhaps unsurprisingly, Masimo’s shares experienced a 4.6% decline on Wednesday, while Apple ended the trading day relatively unscathed at $193.15. (Source: Yahoo Fiance)

Conclusion 

As we near the end of the year, traders, consumers, and analysts may want to keep tabs on any substantial developments from both the AI industry and the tech sector in general to see if any changes materialize. 

They may also want to keep track of the regulatory actions undertaken by the aforementioned companies to see how these might affect their share prices heading into the new year.


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