other tech company

Chatbot builder Anthropic agreed to pay $1.5 billion to authors in a landmark copyright settlement that could redefine how artificial intelligence companies compensate creators.

The San Francisco-based startup is ready to pay authors and publishers to settle a lawsuit that accused the company of illegally using their work to train its chatbot.

Anthropic developed an AI assistant named Claude that can generate text, images, code and more. Writers, artists and other creative professionals have raised concerns that Anthropic and other tech companies are using their work to train their AI systems without their permission and not fairly compensating them.

As part of the settlement, which the judge still needs to be approve, Anthropic agreed to pay authors $3,000 per work for an estimated 500,000 books. It’s the largest settlement known for a copyright case, signaling to other tech companies facing copyright infringement allegations that they might have to pay rights holders eventually as well.

Meta and OpenAI, the maker of ChatGPT, have also been sued over alleged copyright infringement. Walt Disney Co. and Universal Pictures have sued AI company Midjourney, which the studios allege trained its image generation models on their copyrighted materials.

“It will provide meaningful compensation for each class work and sets a precedent requiring AI companies to pay copyright owners,” said Justin Nelson, a lawyer for the authors, in a statement. “This settlement sends a powerful message to AI companies and creators alike that taking copyrighted works from these pirate websites is wrong.”

Last year, authors Andrea Bartz, Charles Graeber and Kirk Wallace Johnson sued Anthropic, alleging that the company committed “large-scale theft” and trained its chatbot on pirated copies of copyrighted books.

U.S. District Judge William Alsup of San Francisco ruled in June that Anthropic’s use of the books to train the AI models constituted “fair use,” so it wasn’t illegal. But the judge also ruled that the startup had improperly downloaded millions of books through online libraries.

Fair use is a legal doctrine in U.S. copyright law that allows for the limited use of copyrighted materials without permission in certain cases, such as teaching, criticism and news reporting. AI companies have pointed to that doctrine as a defense when sued over alleged copyright violations.

Anthropic, founded by former OpenAI employees and backed by Amazon, pirated at least 7 million books from Books3, Library Genesis and Pirate Library Mirror, online libraries containing unauthorized copies of copyrighted books, to train its software, according to the judge.

It also bought millions of print copies in bulk and stripped the books’ bindings, cut their pages and scanned them into digital and machine-readable forms, which Alsup found to be in the bounds of fair use, according to the judge’s ruling.

In a subsequent order, Alsup pointed to potential damages for the copyright owners of books downloaded from the shadow libraries LibGen and PiLiMi by Anthropic.

Although the award was massive and unprecedented, it could have been much worse, according to some calculations. If Anthropic were charged a maximum penalty for each of the millions of works it used to train its AI, the bill could have been more than $1 trillion, some calculations suggest.

Anthropic disagreed with the ruling and didn’t admit wrongdoing.

“Today’s settlement, if approved, will resolve the plaintiffs’ remaining legacy claims,” said Aparna Sridhar, deputy general counsel for Anthropic, in a statement. “We remain committed to developing safe AI systems that help people and organizations extend their capabilities, advance scientific discovery, and solve complex problems.”

The Anthropic dispute with authors is one of many cases where artists and other content creators are challenging the companies behind generative AI to compensate for the use of online content to train their AI systems.

Training involves feeding enormous quantities of data — including social media posts, photos, music, computer code, video and more — to train AI bots to discern patterns of language, images, sound and conversation that they can mimic.

Some tech companies have prevailed in copyright lawsuits filed against them.

In June, a judge dismissed a lawsuit authors filed against Facebook parent company Meta, which also developed an AI assistant, alleging that the company stole their work to train its AI systems. U.S. District Judge Vince Chhabria noted that the lawsuit was tossed because the plaintiffs “made the wrong arguments,” but the ruling didn’t “stand for the proposition that Meta’s use of copyrighted materials to train its language models is lawful.”

Trade groups representing publishers praised the Anthropic settlement on Friday, noting it sends a big signal to tech companies that are developing powerful artificial intelligence tools.

“Beyond the monetary terms, the proposed settlement provides enormous value in sending the message that Artificial Intelligence companies cannot unlawfully acquire content from shadow libraries or other pirate sources as the building blocks for their models,” said Maria Pallante, president and chief executive of the Association of American Publishers in a statement.

The Associated Press contributed to this report.

President Trump struck an unusual deal with Nvidia and Advanced Micro Devices that allows the companies to sell certain chips to China in exchange for giving the U.S. government a 15% cut of those sales.

But the unprecedented agreement also has raised concerns from politicians and legal experts over whether the deal is legal and would pose a national security threat.

Questions also linger about exactly how the deal, which was announced Monday, would work because the U.S. Constitution bars taxes on exports, although some experts said Trump could find a workaround.

The U.S. government might receive $3 billion from the revenue split if China’s demand for Nvidia’s H20 chip — which is less powerful than the company’s highest-end artificial intelligence chip — reaches $20 billion, according to a note from Bernstein Research.

“It ties the fate of this chip manufacturer in a very particular way to this administration that is quite rare,” said Julia Powles, a professor and executive director of the UCLA Institute for Technology, Law & Policy.

Trump’s agreement with the world’s most valuable company could put pressure on other tech companies and major exporters to strike similar deals with the U.S. government, but it’s still unclear what the implications will be internationally, she said.

The deal is the latest example of how tech companies are seeking to curry favor with the Trump administration, which has threatened to impose tariffs on semiconductor companies that don’t commit to investing in the United States.

Apple faced potential tariffs as well, but committed to investing $100 billion more in U.S. manufacturing after Trump criticized the company for expanding iPhone production in India.

Trump also placed restrictions in April around the export of certain AI chips, including Nvidia’s H20 and AMD’s MI308, over national security concerns.

He’s called for the resignation of Intel Chief Executive Lip-Bu Tan, who has faced scrutiny over his reported investments in Chinese companies, but changed his tune after meeting the executive this week.

Democratic and Republican lawmakers have criticized the idea that tech companies should split their sales with the U.S. government in exchange for export licenses that allow them to resume chip sales in China.

“Export controls are a frontline defense in protecting our national security, and we should not set a precedent that incentivizes the Government to grant licenses to sell China technology that will enhance its AI capabilities,” Rep. John Moolenaar (R-Mich.), the chair of the House Select Committee on China, said in a statement.

Rep. Raja Krishnamoorthi, (D-Ill.), a ranking member of that committee, said in a statement that the deal raises questions about its legality and how the funds will be used.

“The administration cannot simultaneously treat semiconductor exports as both a national security threat and a revenue opportunity,” he said. “By putting a price on our security concerns, we signal to China and our allies that American national security principles are negotiable for the right fee.”

The White House didn’t answer questions about the agreement. White House Press Secretary Karoline Leavitt told reporters Tuesday that “the legality of it, the mechanics of it, is still being ironed out by the Department of Commerce.”

On Monday, Trump defended the deal with Nvidia, stating that the H20 chips are “obsolete” and less powerful than the company’s more high-end Blackwell chip. At a news conference, Trump said he met with Nvidia CEO Jensen Huang and initially asked for a 20% revenue split but they came down to 15%.

“We negotiate a little deal,” Trump said. “So he’s selling a essentially old chip.” Trump’s remarks came after a report from the Financial Times over the weekend that Nvidia and AMD would pay 15% of their China chip revenue to the U.S. government. AMD didn’t respond to a request for comment.

An Nvidia spokesperson said in a statement that the company hasn’t shipped H20 chips to China for months but it hopes that easing export restrictions will “let America compete in China and worldwide.”

“America cannot repeat 5G and lose telecommunication leadership. America’s AI tech stack can be the world’s standard if we race.”

For Nvidia, the stakes are high. Huang said in a May interview with Stratechery, a newsletter and podcast, that the Chinese market is about $50 billion a year. Restricting H20 chip sales means that the company is walking away from profits that could be used to compete with China in the race to dominate AI.

Taylar Rajic, an associate fellow at the Center for Strategic and International Studies, said she’s skeptical that legal concerns would halt the arrangement because it’s unclear who would sue.

“I can’t identify who would bring that suit forward,” she said. “It wouldn’t be Nvidia because they’re the ones who negotiated this deal.”

Meanwhile, Chinese officials have their own fears that Nvidia’s chips could have location tracking or remote shutdown capabilities, though the company has denied those accusations.

“China obviously has its own concerns and its own national security considerations that it wants to take into account,” Rajic said. “It just depends on whether or not they want to buy it from us too.”