AI is the media industry's latest frenemy

Hi there, it’s Hannah in New York. Artificial intelligence has put the media industry in familiar territory: A new technology wants to use t [View in browser]( [Bloomberg]( [by Hannah Miller]( Hi there, it’s Hannah in New York. Artificial intelligence has put the media industry in familiar territory: A new technology wants to use the industry’s valuable content but also threatens its very survival. But first... Three things you need to know today: • Verizon is in talks to buy [fiber-internet operator Frontier]( • An OpenAI co-founder has raised $1 billion to build [safe, powerful AI]( • Brazil’s decision to block Elon Musk’s X doesn’t cost [the company much]( Here we go again Media organizations have been at the mercy of the tech industry for decades as [Alphabet Inc](bbg://securities/GOOGL%20US%20EQUITY).’s Google and Meta Platforms Inc. have dictated how information is discovered and distributed. Google’s [monopolistic control]( over search results made the tech giant a vital advertising partner to news outlets adjusting to the rise of the internet. Meta initially benefited newspapers by allowing millions of people to easily share articles on Facebook. But earlier this year, Meta [removed]( its Facebook News Tab for US and Australian users and stopped paying publishers for articles. Meanwhile, Google’s AI Overviews could be [another blow]( to the industry, as they summarize information rather than linking readers to original material. The narrative-style answers provided by AI tools like Open AI’s ChatGPT rival — and sometimes replicate — news articles, leaving publishers fearful of losing readers and ad revenue. To wrest back some of that lost profit, about 20 publishers have signed lucrative licensing deals with tech companies like OpenAI, Alphabet and Perplexity AI, embracing the philosophy of “if you can’t beat ‘em, join ‘em.” These agreements allow tech companies to train their AI models on news articles and content provided by these publishers, which include New Yorker-owner [Condé Nast]( Time and Wall Street Journal-owner [News Corp.](bbg://securities/NWS%20US%20EQUITY) In exchange, the chatbots cite and link back to the original stories. Nick Thompson, chief executive officer of the Atlantic, which signed [a licensing deal]( with OpenAI in May, said working with tech companies can help offset the decline in search traffic that media organizations can expect as AI grows in popularity. “Partnering with a company that is building an AI-based search tool, being included in their search results, helping them to some degree shape the product, is hugely valuable,” he said in an interview. Thompson said the Atlantic hasn’t seen a substantial increase in traffic since partnering with OpenAI, but acknowledged it’s still early in the game. OpenAI CEO Sam Altman said in a brief interview at Allen & Co.’s annual Sun Valley conference in July that his startup is still figuring out how ChatGPT can best benefit media companies. “Is this going to be about driving traffic, is it going to be revenue streams, are there sort of totally new business models to explore?” he asked. “We have tried to pick these initial partners that are excited to go on this sort of exploratory journey with us.” At the same time, other publishers feel blindsided by AI. With chatbots circumventing paywalls in order to train on, and pull direct content from, news articles, some outlets have alleged plagiarism and copyright infringement. A group of newspapers owned by hedge fund Alden Global Capital, including the Chicago Tribune and the New York Daily News, is suing OpenAI and its biggest backer, [Microsoft Corp.](bbg://securities/MSFT%20US%20EQUITY), for up to $150,000 in damages per article taken by its ChatGPT and Copilot chatbots, according to Steve Lieberman, an attorney representing the papers. “Why would you subscribe? All of that traffic, or at least a large portion of it, is going to be captured by OpenAI and Microsoft, and they’re going to capture the financial benefits from those visitors,” he said. The New York Times lobbed a similar suit against these companies, stating in its court filing that, “If the Times and other news organizations cannot produce and protect their independent journalism, there will be a vacuum that no computer or artificial intelligence can fill.” But the Gray Lady’s gripe with AI is nuanced. While the Times doesn’t have a licensing deal with OpenAI, it made an agreement that lets its newsroom experiment with the startup’s AI tools, according to people familiar with the matter, who declined to be identified discussing private information. “The Times has long been at the forefront of exploring how technology can support our mission of delivering independent journalism to our readers, and generative AI is no exception,” a company spokesperson said in a statement to Bloomberg. AI does provide value to newsrooms—the Times uses it for Spanish-language translation and AI-voiced listening options for articles, for example. But the newspaper’s simultaneous legal battle and agreement with OpenAI shows that when it comes to the media, AI walks a fine line between friend and foe, taking a similar path to the technologies that came before it.—[Hannah Miller](mailto:hmiller129@bloomberg.net) The big story The Biden administration’s big effort at industrial policy — remaking the US chip industry — [is at risk as Intel Corp.]( the biggest US recipient of government money from the Chips and Science Act, struggles with financial issues and potential problems in constructing new factories. One to watch [Vanderbilt Law School Professor Rebecca Allensworth joins Bloomberg Television to discuss the US Justice Department’s antitrust probe of chipmaker Nvidia.]( Get fully charged Hewlett Packard Enterprise reported a boost in sales of its servers for AI, but investors were concerned about the shrinking profit margins [on the equipment](. Palo Alto Networks cut a deal to buy cybersecurity software assets from IBM in a bid to [gain more customers](. The city of Columbus, Ohio, has won a restraining order against a cyber researcher in a case the highlights the kinds of legal threats that can haunt security specialists as they flag vulnerabilities that [put people’s personal data at risk](. 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