OpenAI faces new state-level probe amid confidential IPO filing

A coalition of state attorneys general has opened an investigation into OpenAI. As part of the probe, the company was served on Friday with a subpoena from New York’s attorney general, according to The Wall Street Journal. A subpoena is a legal document ordering an entity to produce documents. The inquiry seeks records concerning a wide range of topics, including OpenAI’s advertising, user engagement and retention, model sycophancy, handling of consumer and health data, and its treatment of minors and seniors.

In response to the investigation, OpenAI emphasized its commitment to safety and responsible technology. An OpenAI spokesperson stated: “AI is a new and powerful technology, and we work every day to safely bring its benefits to people in a responsible way. We take the concerns raised by state attorneys general seriously and intend to engage constructively with their offices.” The spokesperson added that ChatGPT now features a more protective experience for minors and individuals in difficult situations, pointing to safeguards like age prediction, parental tools, and a ban on advertising targeting children.

The multi-state probe intensifies a growing list of legal and regulatory challenges for the artificial intelligence company. OpenAI is currently facing lawsuits over alleged copyright infringement and ChatGPT’s alleged role in user suicides. In Florida, Attorney General James Uthmeier sued OpenAI and its CEO Sam Altman, claiming the company and Altman ignored internal and external safety warnings, put children at great risk, and allowed a dangerous product to reach millions of Floridians. Additionally, Altman recently apologized to the community of Tumbler Ridge, Canada, after a mass shooting, acknowledging that OpenAI failed to alert law enforcement after the company flagged and banned the suspected shooter’s ChatGPT account. These battles follow a high-profile trial in which OpenAI defeated its co-founder Elon Musk, who had accused the company of violating its founding agreement.

Despite the mounting regulatory pressure, OpenAI announced this week that it has filed confidentially to go public. This process of initiating an IPO filing without immediate public disclosure allows the company to begin its transition to public markets away from early public scrutiny.

Why it matters

The investigation signals a shift from federal-level scrutiny to a multi-state legal front, complicating OpenAI’s path to public markets as regulators focus on data privacy and child safety.