??AI&Tech Legal Digest || January 24, 2025
Anita Yaryna
Senior IP & Tech Legal Counsel | US-EU Product, Privacy, and Policy Counsel | AI Advisor | Commercial Counsel
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LinkedIn's Private Message Data Allegedly Used for AI Training Without User Consent
A class action lawsuit filed in California federal court alleges LinkedIn secretly harvested Premium users' private messages for AI training purposes. The lawsuit claims that in August 2023, LinkedIn implemented an automatic opt-in privacy setting allowing third parties to use personal data for AI training, without explicitly informing users of this change.
The legal filing highlights LinkedIn's subsequent privacy policy modifications in September 2023, which retroactively included language about data disclosure for AI training. Additionally, the platform's FAQ section was updated to indicate that while users could opt out of future data sharing, this wouldn't affect data already used for training purposes. These actions, according to the lawsuit, suggest LinkedIn's awareness of potential contractual and privacy violations.
The lawsuit seeks $1,000 per user in damages under the US Federal Stored Communications Act, along with additional compensation for breach of contract and California's unfair competition law violations. While LinkedIn, which generates $1.7bn in premium subscription revenue, maintains these claims are meritless, it's noteworthy that the company has not enabled such data sharing in the UK, EEA, and Switzerland. This development affects a significant portion of LinkedIn's user base, as almost a quarter of its billion-plus users are located in the US.
Trump Revokes Biden's 2023 AI Executive Order on First Day in Office
In a significant policy shift, President Donald Trump has rescinded the comprehensive AI executive order implemented by former President Biden in 2023, which established federal oversight mechanisms for artificial intelligence development and deployment. The reversed order had mandated NIST to develop guidance for identifying and mitigating AI model flaws and biases.
A key point of contention was the requirement for AI developers to share safety test results with the federal government before public release. Trump-aligned critics claimed these provisions forced companies to expose trade secrets and created excessive regulatory burden. This aligns with Trump's campaign promises to promote AI development with fewer restrictions, though specific policy alternatives remain undefined.
The reversal marks a stark departure from the previous administration's approach to AI governance, potentially affecting how companies manage AI safety testing and transparency.
UK Court Rules Against Flutter Unit for Illegal Data Collection in Gambling Case
The London High Court found Sky Betting and Gaming, a Flutter Entertainment subsidiary, violated UK data protection law by illegally collecting and using a problem gambler's data for marketing purposes through cookies between 2017-2019. The case involved a customer who lost over ￡45,000 over a decade, with the company sending personalized direct marketing messages without sufficient consent.
Sky Betting and Gaming, planning to appeal, has faced previous penalties including a ￡1.17 million fine in 2022 for marketing to self-excluded customers and an ICO reprimand for unlawful data processing in 2023. The company maintains it "fundamentally disagrees" with the judgment and states it has implemented significant changes to its controls and processes over the past six years as part of its safer gambling investment.
The ruling emerges as UK regulators intensify scrutiny of gambling operators' data practices and marketing strategies, particularly regarding problem gambling. While the judge noted the decision was confined to this case's circumstances, the company's data handling has attracted regulatory attention before. In September, the Information Commissioner's Office found Sky Betting and Gaming had shared personal information with advertising technology companies without prior knowledge or consent. The company currently conducts financial vulnerability checks and implements deposit limits for customers returning after self-exclusion periods.
OpenAI Contests Indian Court's Authority in ANI Copyright Lawsuit
OpenAI has challenged an Indian court's jurisdiction in ANI's copyright lawsuit, stating that removing ChatGPT's training data would violate its U.S. legal obligations. In an 86-page Delhi High Court filing, OpenAI argued it lacks presence in India and maintains its training data servers outside the country. The case represents India's most significant AI-related legal battle to date.
The lawsuit, filed by news agency ANI in November, alleges unauthorized use of its content for ChatGPT training. While OpenAI agreed to stop using ANI's content, it resists data deletion demands, citing ongoing U.S. litigation requiring data preservation. OpenAI claims ANI's test prompts deliberately manipulated ChatGPT to produce verbatim content. ANI counters that ChatGPT reproduces substantial portions of its work in response to user prompts, raising unfair competition concerns given OpenAI's commercial partnerships with other news organizations.
The case, scheduled for January 28, emerges as OpenAI transitions to a for-profit model after raising $6.6 billion last year and expands content partnerships with major publishers including Time magazine, Financial Times, Le Monde, and Axel Springer. ANI, partly owned by Reuters, maintains the Delhi court's jurisdiction and plans a detailed response. The lawsuit parallels similar global challenges, including the New York Times' case against OpenAI in the United States, as content creators increasingly question AI companies' use of their intellectual property for model training.
FTC Hits Genshin Impact Developer with $20M Fine Over Privacy and Monetization Practices
Singapore-based Cognosphere, operating as HoYoverse in the US, has agreed to pay $20 million to settle Federal Trade Commission charges over privacy violations and deceptive practices in its popular game Genshin Impact. The FTC alleged the company illegally shared children's data with advertisers and implemented misleading monetization tactics through its loot box system.
The settlement addresses concerns about the game's complex virtual currency system and loot box mechanics, which the FTC claims obscured the true cost of obtaining rare characters. Genshin Impact, which has generated over $6 billion in mobile revenue since its 2020 release, required players to navigate multiple currency tiers with different exchange rates, potentially leading to significant real-money expenditures.
Under the settlement terms, HoYoverse must implement direct cash purchases for loot box content, disclose virtual currency cash values, and require parental consent for loot box purchases by users under 16. While not admitting wrongdoing, the company announced plans to introduce new age-gate protections and enhance in-game disclosures for US players. The settlement awaits federal judge approval.
FTC Raises Red Flags Over Microsoft-OpenAI Partnership and Big Tech's AI Investments
The Federal Trade Commission has released a report expressing concerns about Microsoft's $13 billion investment in OpenAI and similar partnerships between tech giants and AI startups, warning of potential market dominance extension from cloud computing into AI. The agency highlighted risks in the current structure of these relationships, including Microsoft's deal with OpenAI and partnerships between Amazon, Google, and Anthropic.
The FTC report identified several concerning practices, including "circular spending" where investments are required to be spent on the investing company's cloud services. The agency also noted that at least one tech giant received sensitive financial performance data and model outputs from their AI partner. This level of access and control could lead to market concentration and reduced competition.
The investigation, initiated last year under the FTC's 6(b) authority, revealed potential issues with talent consolidation in the AI sector and exclusivity rights that could discourage AI companies from multi-vendor partnerships. While Microsoft defends its OpenAI partnership as fostering innovation and startup growth, the FTC's findings may inform future regulatory actions under the incoming Trump administration. The agency is simultaneously conducting a broader antitrust investigation into Microsoft's AI investments and other business practices.
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FTC to Settle with Genshin Impact Developer Over Deceptive Monetization Claims
The Federal Trade Commission is finalizing a settlement with Hoyoverse, the publisher of Genshin Impact, regarding allegedly deceptive monetization practices in the game's "gacha" system. The investigation, ongoing since last summer, focused on the game's complex virtual currency conversion system for obtaining rare "five-star" characters.
The settlement, expected to be announced shortly, may include reimbursements for affected players. The case specifically examined whether the game's multi-tiered currency system obscured the true value of in-game purchases. Genshin Impact, which has generated over $6 billion in mobile revenue since 2020, allows players to spend real money on virtual currency to "wish" for characters.
The action comes amid broader FTC scrutiny of video game loot boxes since 2019. While "gacha" mechanics are common in Asian markets, Genshin Impact's implementation, requiring multiple currency conversions before obtaining characters, has drawn particular attention from regulators.
India Court Suspends Key Aspects of WhatsApp Antitrust Order
India's National Company Law Appellate Tribunal has temporarily suspended a Competition Commission of India (CCI) ruling that restricted WhatsApp's data-sharing practices with Meta and imposed a 2.13 billion rupee ($24.7 million) fine. The suspension allows WhatsApp to continue sharing user data within the Meta group while requiring payment of half the penalty amount.
The CCI's original order, issued late last year, found WhatsApp's 2021 privacy policy update abusive of its market dominance by forcing users to accept extensive data collection and sharing within Meta. WhatsApp argued this ruling directly impacted its business model by imposing a five-year ban on certain data collection and sharing practices.
The messaging platform, which faces multiple legal challenges in India over its privacy policies, maintains ongoing litigation regarding privacy rights. WhatsApp has committed to not removing users who reject its 2021 policy until India implements its data protection regulations. The CCI's lawyers previously noted that WhatsApp maintains less intrusive privacy policies in Europe.
Meta's Ad-Free Subscription Model Under Fire for EU Privacy Compliance
The European Consumer Organisation (BEUC) has criticized Meta's revised paid ad-free subscription service for Facebook and Instagram, claiming it still violates EU consumer, privacy, and antitrust regulations. Despite Meta's 2023 modifications offering reduced personalized ads and a 40% fee reduction, BEUC maintains these changes were superficial.
BEUC Director General Agustin Reyna argues that Meta's service continues to deny users a fair choice, steering them toward behavioral advertising through unclear terms and misleading practices. The organization contends that users cannot freely consent to data processing and that Meta degrades service quality for those who decline personal data use.
Meta disputes these allegations, stating their November changes satisfy and exceed EU regulatory requirements. However, EU antitrust regulators charged Meta in July 2023 for Digital Markets Act violations, specifically regarding the binary choice presented to users in the ad-free subscription model. BEUC has called for immediate investigation by consumer protection authorities, data protection regulators, and the European Commission.
Indonesia Fines Google $12.4M Over Play Store Payment Practices
Indonesia's antitrust regulator has fined Google 202 billion rupiah ($12.4 million) for requiring app developers to use Google Play Billing, charging fees up to 30% and threatening removal from the Play Store for non-compliance. The investigation, launched in 2022, found Google violated monopoly laws through practices that reduced developer earnings.
The agency determined Google holds a 93% market share in Indonesia's rapidly growing digital economy of 280 million people. Google plans to appeal the ruling, stating its practices foster a healthy app ecosystem and citing its introduction of alternative billing options for developers.
This penalty adds to Google's regulatory challenges, following over 8 billion euros in EU fines over the past decade for anti-competitive practices related to various services including Android and advertising.
EU Probes Stablecoin Holder Protections Under MiCAR Framework
The European Commission is examining how EU crypto regulations protect investors in e-money tokens (EMTs) after France's banking regulator ACPR raised questions about cross-border stablecoin issuance. The inquiry focuses on whether EMTs can be issued simultaneously by EU-licensed and non-EU entities.
Under the 2023 MiCAR framework, EMT issuers must obtain supervisory approval and maintain reserves to guarantee investor redemptions. The investigation specifically examines cases like Circle's USDC, where tokens issued by its EU entity (Circle SAS) are fully fungible with those from Circle LLC, raising questions about redemption rights for EU customers.
The ACPR has requested clarification on whether EU-based entities can restrict redemption requests to EU customers only. This regulatory examination comes as the U.S. takes a different approach, with the Trump administration pledging to reduce cryptocurrency regulations and the SEC forming a task force for new rules.
In this fast-paced, ever-changing world, it can be challenging to stay updated with the latest legal news in the AI and tech sectors. I hope you found this digest helpful and were able to free up some time for the real joys of life.
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Anita