A coalition of state attorneys general has subpoenaed OpenAI over its data practices and consumer safety measures ahead of the company's anticipated initial public offering. The multi-state scrutiny signals rising regulatory friction for AI developers facing compliance and liability risks.
New York subpoena targets data and safety practices
A Wall Street Journal report cited people familiar with the matter, stating New York Attorney General Letitia James' office issued the subpoena on Friday. The demand seeks documents covering advertising practices, user retention strategies, and the handling of consumer and health data.
The inquiry also targets activities involving minors and seniors, deep-learning models, and internal company policies. Regulators are specifically examining "AI sycophancy," defined as instances where chatbots excessively agree with or reinforce user views instead of providing balanced responses.
Mounting legal pressure across multiple states
OpenAI confidentially filed paperwork with the Securities and Exchange Commission for a potential IPO shortly before this investigation emerged. The company now faces parallel legal challenges.
Earlier this month, Florida became the first state to sue OpenAI and CEO Sam Altman. The lawsuit alleges the company knowingly released an unsafe product despite internal warnings about potential risks.
In April, Florida Attorney General James Uthmeier opened a criminal investigation into OpenAI. Authorities claim a suspect in a mass shooting at Florida State University used the ChatGPT chatbot as a confidant while planning the attack.
Broader state scrutiny of AI products
State regulators are broadening their probes beyond a single company. California Attorney General Rob Bonta announced an investigation earlier this year into sexually explicit images allegedly generated using xAI's Grok chatbot.
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 a separate request for comment.
Why this matters for legal professionals
Legal teams at technology companies must now treat state-level regulatory actions as a primary compliance vector, not just a federal concern. Proactive auditing of data handling, user engagement metrics, and algorithmic behavior is critical to mitigate subpoena exposure. Attorneys assessing these shifting compliance requirements can explore resources focused on AI for Legal to better address emerging state mandates and liability frameworks.
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