Microsoft (MS) is facing a class-action lawsuit in the U.S. over allegations of inflating ChatGPT subscription fees through an exclusive cloud contract.
On Monday, industry sources reported that 11 ChatGPT Plus subscribers filed an antitrust lawsuit against Microsoft in a California federal court on October 13 (case number 3:25-cv-08733).
The lawsuit alleges that Microsoft’s 13.75 billion USD exclusive cloud contract restricted OpenAI’s computing resources, resulting in inflated ChatGPT subscription fees.
In their complaint, the plaintiffs argue that since Microsoft’s initial investment in 2019, the tech giant has confined OpenAI’s computing resources to its Azure cloud platform. They claim that this constraint has led to ChatGPT service prices being set 100 to 200 times higher than those of its competitors.
As evidence, the plaintiffs point to the recent pricing war in the artificial intelligence (AI) chatbot market. In February, Chinese firm DeepSeek attracted attention by offering up to a 75% discount on token application programming interfaces (API) prices for its R1 model during off-peak hours (and a 50% discount for its V3 model), while OpenAI maintained its existing API token prices.
OpenAI only reduced its O3 model API input and output prices by up to 80% in June, after it began sourcing computing resources from Google Cloud. The plaintiffs contend that this is compelling evidence that Microsoft’s exclusive cloud contract hindered OpenAI’s ability to compete on price.
The lawsuit also emphasizes that Microsoft receives 20% of OpenAI’s product and service revenue (while holding a 49% stake in OpenAI’s for-profit arm) while simultaneously developing its own AI platform, Copilot, and various AI models (including the MAI series). Microsoft is also working on inference models to directly compete with OpenAI’s O1 and O3-mini.
The plaintiffs allege that Microsoft has kept OpenAI under strict control, manipulating computing resources at will. They describe this arrangement as a sword of Damocles wielded by a major competitor over OpenAI.
The lawsuit seeks compensation for the excessive fees charged since ChatGPT’s launch in November 2022 and requests that the court prevent Microsoft from imposing similar restrictive measures in the future.
It is worth noting that the U.S. Federal Trade Commission (FTC) expressed concerns in a January report that Microsoft’s investment in OpenAI could extend its cloud computing dominance into the AI market.
Industry experts predict significant market repercussions if the court orders the disclosure of the Microsoft-OpenAI contract, potentially revealing details about extensive control, pricing policies, and competition-restraining clauses.
Microsoft has issued an official statement denying the plaintiffs’ claims, asserting that its partnership with OpenAI promotes competition, innovation, and responsible AI development. OpenAI has not yet commented on the lawsuit.