Welcome to The Corner. In this issue, we conclude that Anthropic’s $1.5 billion class action settlement with authors whose pirated works were used to train its AI model will fail to deter the AI industry’s abusive practices.
Anthropic’s Deal with Book Authors Won’t Be Enough to Curb Abusive AI Practices
By Eileen Pomeroy
A $1.5 billion class action settlement between book authors and Anthropic, the maker of popular large language model Claude, has been widely praised as a positive step toward compensating creators for the use of their works in AI systems. But details of the deal show it will do little to curb copyright infringement practices by Big Tech and other AI companies that affect creators and other potential claimants, including news publishers and local media.
Monetarily, the settlement represents a small burden to Amazon-backed Anthropic compared to a trial that could have found that everyone in the class deserved compensation. The settlement amount — up to $3,000 for about 500,000 works out of the seven million pirated books — pales in comparison to the corporation’s latest market valuation. In September, Anthropic raised $13 billion in new capital, which valued the corporation at $183 billion, or more than 100 times the settlement payout.
Most important for authors and other creators, Bartz v. Anthropic allowed the corporation to sidestep core copyright concerns by characterizing AI training on copyrighted works as “fair use.” Federal Judge William Alsup sided with Anthropic when responding to a motion to dismiss filed earlier in the case, ruling that using legally obtained work in AI training is transformative “fair use” and therefore legal under current copyright law. This effectively prevented the book authors from receiving royalties for their work’s contributions to the future profits of large language models.
Such a ruling narrowed the case for a subsequent settlement, with only one issue still to be resolved: piracy. Despite Anthropic’s partial win from its motion to dismiss, the settlement did hold that Anthropic — and potentially other AI providers — can be held accountable for using pirated works in its model training, a practice that AI companies have admitted. As such, this case not only makes it clear that data acquisition methods matter but may also chart a path for other authors whose rights have been infringed in similar ways to claim compensation.
There is much uncertainty about how the settlement will be implemented in practice. Judge Alsup voiced significant concerns over its obscure details and complex procedures for copyright owners, such as dividing settlement payments among multiple claimants, which almost caused him to reject the settlement deal entirely.
On the other hand, the complicated nature of the retrospective settlement may also encourage other AI companies to pursue proactive licensing to avoid legal costs later, which would give creators some upfront compensation.
Even for the most prolific of authors, the settlement will not result in anything approaching a windfall. Even if a particular book is in line to receive the $3,000 payout, the author will likely have to split the settlement 50/50 with their publisher, and that’s after legal fees and other costs are deducted.
Even though this case concerns book authors, its implications for training practices and compensation affect other copyright holders, especially the news community. For now, Bartz v. Anthropic and its narrow focus on pirated works will have a limited direct impact across the news community, said Matt Pearce, Director of Public Policy at Rebuild Local News. For local journalists and nonprofit newsrooms, pursuing compensation is a daunting challenge, not least because they increasingly depend on funding from philanthropic foundations and hence must remain publicly accessible, he said.
The news industry has complex economic ties with Big Tech, whose platforms serve as critical infrastructure for delivering and monetizing content, said Pearce. Additionally, publishers need to balance copyright claims with securing public access to their content, including in AI services, Pearce said. This makes it hard for newsrooms to move forward with litigation in a united front, similar to the class action case faced by Anthropic.
Thus far, most media outlets have negotiated directly with particular AI companies, resulting in a chaotic legal landscape. Just in the case of Open AI, for instance, the Washington Post, Guardian, and Atlantic have all signed deals with the company, while the New York Times and Ziff Davis have filed lawsuits against the corporation.
Ultimately, the Anthropic settlement underscores that the news community needs to unite and organize like book authors, he said. “There’s a challenging question for us to think about: What would an equivalent settlement look like for the local news world, and would it be more onerous than what the authors are trying to deal with?”
Open Markets Launches the Southern Justice Project to Study Corporate Power in Deep South
The Open Markets Institute announced the launch of the Southern Justice Project, a major new initiative to study the economic, political, and social effects of corporate concentration and social control across the deep South. The project will be led by Evan Turnage, a native of Jackson, Mississippi, who served as former chief counsel to Senate Democratic Leader Chuck Schumer and senior counsel to Senator Elizabeth Warren.
The Southern Justice Project will document how monopolization and corporate consolidation shape life in poor, rural, and Black communities — and will identify solutions to restore economic opportunity and democratic participation. The initiative will focus initially on Mississippi, where researchers will examine the structure of at least six key sectors of the regional economy, from agriculture and healthcare to retail and labor markets and combine rigorous economic and policy research with extensive community engagement. “Areas like the Mississippi Delta have been ground zero for the harmful effects of monopoly power for decades,” Turnage said. “This project will give voice to the people most affected, document how concentrated control deepens inequality, and begin charting a path toward a more democratic and just economy.” Politico’s Playbook newsletter covered Turnage’s departure from Congress to join the Open Markets Institute.
📝 WHAT WE'VE BEEN UP TO:
- Project Syndicate published an op-ed coauthored by Alvaro Bedoya, former Federal Trade Commissioner, and Open Markets legal director Sandeep Vaheesan condemning the Trump administration’s effective suspension of the FTC’s non-compete ban. They argue that the Trump’s FTC failure to legally defend the ban, the target of several lawsuits by employer groups, represents a major setback for American workers and reverses one of the most significant pro-labor reforms in decades. Open Markets wrote about the legal fight to enforce the ban in August. Read Bedoya and Vaheesan’s op-ed here.
- Open Markets Executive Director Barry Lynn spoke on the future of AI, along with Nobel Prize economist Daron Acemoglu and Signal President Meredith Whittaker. The discussion, entitled “Are We Free to Choose our AI Future?,” was hosted by Grand Continent at the Ecole Normale Superieure in Paris.
Open Markets editorial director Anita Jain reviewed tech critic Cory Doctorow’s Enshittification: Why Everything Suddenly Got Worse and What to Do About It in the Washington Monthly. “Enshittification is a ride through all the bait-and-switch tactics, financial trickery, and gatekeeping to which Big Tech platforms subject users,” Jain writes, using as an example Google’s degrading of its main product, search.
OMI transportation analyst Arnav Rao appeared in a video produced by More Perfect Union on the proposed merger between Union Pacific and Norfolk Southern, which would further consolidate the country’s railroad system.
The Organization for Security and Co-operation in Europe (OSCE) in late October released a landmark report, “Safeguarding Media Freedom in the Age of Big Tech Platforms and AI,” that draws directly on Center for Journalism & Liberty at OMI’s work on platform remuneration and must-carry obligations, identifying these as key tools to safeguard media freedom in the digital era. The report explains how a few dominant digital platforms have captured online information spaces, creating a systemic risk to media freedom and sustainability, pluralism, and democracy. CJL@OMI director Courtney Radsch spoke about the report’s finding at the International Press Institute World Congress’s media conference last month.
Audrey Stienon, Open Markets industrial policy program manager, argues in Tech Policy Press that President Trump’s use of trade coercion reflects Big Tech’s longstanding manipulation of trade policy to erode national sovereignty. “In particular, Trump has attacked Europe’s tech policies —from its proposed digital service taxes to its signature digital market regulations — which prevent the Big Tech platforms from having the same free rein in the European digital economy as they do in the U.S.,” she writes in the piece, which came as part of the “Ideas for Europe’s Future” series.
Writing for the same Tech Policy Press series, Courtney Radsch, director of the Center for Journalism and Liberty at Open Markets, warned that the U.S.’s framing of the EU’s Digital Services Act and Digital Markets Act as censorship or anti-American taxes is an attempt to shield Big Tech from accountability, erode European sovereignty, and empower anti-democratic forces. “The increasingly cozy relationship between the world’s only superpower and the most powerful tech corporations in the world is creating an unprecedented concentration of power that threatens to undermine the pillars of democracy at home and around the world,” she writes.
Open Markets senior fellow Johnny Ryan, as part of the same series, published a piece in Tech Policy Press arguing that Europe’s digital weakness is self-imposed rather than inevitable and that the EU has the legal and regulatory tools to enforce its own rules against Big Tech. “European innovators will never scale while foreign titans dominate by illegally collecting and using data,” he wrote. Ryan was also quoted in Fast Company commenting on OpenAI’s new AI web browser Atlas. “It’s hard to get people to change browsers,” he said. But “as Chrome gets worse, the incentive goes up.”
Open Markets Institute’s senior legal analyst Daniel Hanley released an expert brief, The Enduring Force of the Federal Antitrust Laws, detailing how the White House, state attorneys general, and even private litigants can use existing statutes to rein in corporate power. Hanley argues that federal antitrust laws remain powerful tools—if enforcers have the courage to act—to reduce prices, boost wages, and curb unfair business practices.
🔊 ANTI-MONOPOLY WINS:
- A federal judge in New York granted partial summary judgement to newspaper holder Gannett in a case seeking damages against Google for advertising market practices that another federal court in Northern Virginia found illegal earlier this year. (USA Today)
- Health insurer Cigna has ended drug rebates to pharmacy benefit managers in many of its health plans in a bid to quell criticism that the model incentivizes opaque pricing and kickbacks that drive up insurance and prescription drug costs. (Reuters)
- Apple could be forced to pay billions of dollars in restitution to users after the UK’s Competition Appeals Tribunal found it abused its market power with the steep 30% commission the corporation imposes on all in-app payments. (BBC)
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📈 VITAL STAT:
$3.7 billion
The combined value of a company resulting from a proposed merger between Getty Images and rival stock-photo firm Shutterstock, which is facing an in-depth probe from the UK’s antitrust regulator over concerns the merger could lead to higher prices and lower quality of stock images for customers. (Bloomberg)
📚 WHAT WE'RE READING:
The Age of Extraction: How Tech Platforms Conquered the Economy and Threaten Our Future Prosperity — Columbia Law School professor and former White House official Tim Wu dives deep into the rise of the platform economy, explaining how a handful of powerful tech corporations have exploited their dominance in digital markets to manipulate and exploit people around the world. Wu also provides readers with a suite of potential policy reforms that could rebalance the playing field, spur innovation, and make our online lives a bit less miserable.
Pre- Order Chief Economist Brian Callaci's new book:
Open Markets Institute’s chief economist Brian Callaci will publish his first book Chains of Command: The Rise and Cruel Reign of the Franchise Economy on April 20 through University of Chicago Press. The book offers a sharp critique of the franchise model used by many fast food chains, which has shaped labor markets, corporate power, and inequality in the U.S. In Chains of Command, Callaci shows how franchisors have altered the legal treatment of corporations in their favor through a decades-long crusade of lobbying and litigation, and argues for greater cooperation between workers and small franchise owners. Pre-order the book here.
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