OpenAI is reportedly facing a multi-state investigation as attorneys general examine the company’s data practices, safety measures and the potential impact of its artificial intelligence products on consumers ahead of its anticipated initial public offering.



<h2>State Attorneys General Seek Information On OpenAI Operations</h2>



According to a Wall Street Journal report citing people familiar with the matter, a coalition of state attorneys general has launched an investigation into OpenAI and served the company with a subpoena on Friday.



The subpoena, reportedly issued by New York Attorney General Letitia James’ office, seeks documents related to a broad range of topics, including advertising practices, user engagement and retention strategies, consumer and health data handling, activities involving minors and seniors, deep-learning models, AI sycophancy and internal company policies.



AI sycophancy refers to situations in which chatbots excessively agree with or reinforce users’ views rather than providing balanced responses.



In a statement to the Journal, an OpenAI spokesperson said the company takes concerns raised by state attorneys general seriously and intends to engage constructively with their offices.



OpenAI did not immediately respond to Benzinga's request for comments.



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<h2>OpenAI Faces Growing Regulatory And Legal Pressure</h2>



The reported investigation comes shortly after OpenAI confidentially filed paperwork with the Securities and Exchange Commission for a potential IPO.



The company is also facing legal scrutiny elsewhere. Earlier this month, Florida became the first state to sue OpenAI and CEO Sam Altman, alleging they knowingly released an unsafe product despite warnings about potential risks.



In April, Florida Attorney General James Uthmeier opened a criminal investigation into OpenAI over ChatGPT’s alleged role in assisting a suspect involved in a mass shooting at Florida State University.



Authorities claim the suspect used the chatbot as a confidant while planning the attack.



<h2>AI Industry Under Broader State Scrutiny</h2>



OpenAI is not alone in attracting attention from state regulators.



In December, a coalition of 42 attorneys general sent a letter to OpenAI, Meta Platforms, Inc. (NASDAQ:META), Anthropic, Alphabet Inc.'s (NASDAQ:GOOG) (NASDAQ:GOOGL) Google and SpaceX's (NASDAQ:SPCX) xAI, urging stronger safeguards for vulnerable users and warning developers could face accountability for harmful chatbot outputs.



California Attorney General Rob Bonta also announced an investigation earlier this year into sexually explicit images allegedly generated using xAI’s Grok chatbot.



Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.



Image via Shutterstock



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OpenAI faces a multi-state investigation by attorneys general into data practices, AI safety, and consumer protection ahead of its IPO. New York led the subpoena, while Florida previously sued OpenAI over alleged unsafe product release and criminal involvement in a shooting. This scrutiny aligns with broader regulatory pressure on major AI firms like Meta and Google to implement stronger safeguards for vulnerable users.

- OpenAI is under investigation by a coalition of state attorneys general, examining its data practices and AI impacts, prompting a subpoena for related documents.  
- This scrutiny comes ahead of OpenAI's potential IPO and follows a legal lawsuit from Florida, alleging the company released an unsafe product.  
- The broader AI industry is also facing heightened regulatory pressure, with multiple states urging stronger safeguards and accountability measures for developers.

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OpenAI Reportedly Faces Legal And Regulatory Storm As States Probe AI Safety and Consumer Protections Ahead Of IPO