Disney's deal with OpenAI is about controlling the future of copyright

This morning Disney and OpenAI announced a three-year licensing agreement: Starting in 2026, ChatGPT and Sora can generate images and videos incorporating Disney IP, including more than 200 characters from the company's stable of Star Wars, Pixar and Marvel brands. To say these companies make for strange bedfellows is an understatement.  

The agreement brings together two parties with very different public stances on copyright. Before OpenAI released Sora, the company reportedly notified studios and talent agencies they would need to opt out of having their work appear in the new app. The company later backtracked on this stance. Before that, OpenAI admitted, in a regulatory filing, it would be "impossible to train today's leading AI models without using copyrighted materials." 

By contrast, Disney takes copyright law very seriously. In fact, you could argue no other company has done more to shape US copyright law than Disney. For example, there's the Sonny Bono Copyright Term Extension Act, which is more derisively known as the Mickey Mouse Protection Act. The law effectively froze the advancement of the public domain in the United States, with Disney being the greatest beneficiary. It was only last year that the company's copyright for Steamboat Willie expired, 95 years after Walt Disney first created the iconic cartoon.

On the face of it, it's unclear OpenAI is getting much value out of the deal. As part of the pact, Disney will host a "curated" selection of Sora-generated videos on its streaming platform Disney+, legitimizing the medium of AI-generated video in a way it hasn't been before, but it would appear Disney has the option to spotlight as much or little of it as it sees fit.

Additionally, the $1 billion Disney agreed to invest in OpenAI is a drop in the ocean for a company that's expected to burn through more cash in five years than Uber, Tesla, Amazon and Spotify did combined before they became profitable. If anything, the addition of Disney characters is likely to make operating ChatGPT and Sora more expensive for OpenAI; the company will now need to pay a licensing fee on top of the cost of running its servers to generate images and videos. At this stage, it's also hard to put a value on Disney's pledge to use OpenAI's APIs. The company has said those tools will "enable new products, tools and experiences," including some found inside of Disney+, but beyond that it hasn't shared specifics.

Bob Iger might be feckless, but he's not stupid. Sometime this week or soon after, President Trump is expected to sign an executive order that makes good on part of his AI Action Plan from July. Specifically, the president has promised to fight against "burdensome" state-level regulation of AI. According to CNN, a recent draft of Trump's order calls for the creation of an AI Litigation Task Force to challenge and preempt state AI laws in favor of the president's own more lax regulatory regime. 

It's unclear how successful the administration will be in that effort, but clearly Disney is thinking ahead. It's banking on the fact that this time it won't be able to count on the federal government to shape copyright law in its interest, so instead it's making a deal with an industry pushing the boundaries of intellectual property rights as we know them. More importantly, it has partnered with the one AI company it can actually leverage. 

As I argued in a recent piece, OpenAI is in a far different and more precarious position now than it was at the end of 2022 following the release of ChatGPT. The company is just one AI provider in a sea of competition, and you can't even argue its models are the best, based either on benchmarks or user feedback. Moreover, OpenAI has yet to turn a profit, and has adopted an extremely risky investment strategy. In recent months it has signed more than $1.4 trillion worth of infrastructure deals, hoping to outmuscle the competition that's already beating it through scale.  

It's not an accident Disney sent a cease-and-desist letter to Google a day before its agreement with OpenAI became public. OpenAI might be the most valuable private company in the world, but Alphabet, Google's parent company, is worth more than $3 trillion. In any negotiations between the two, at best Disney would be on equal footing, and certainly not in a position where it could demand some amount of control over Google's AI projects. 

And yet by accounts it won exactly that from OpenAI. According to Axios, the deal gives Disney a fair amount of control over how its intellectual property is used. The two will form a joint steering committee designed to monitor the content users create on ChatGPT and Sora. As you surf the web today, you'll likely see a lot of opinions on how this legitimizes AI video. And while that's true, far more important is the fact Disney has secured a seat at the table to decide how the technology evolves over the coming years. 

Much like with news publishers, OpenAI and other chatbots concerns took a stance of begging forgiveness rather than asking permission towards copyright. It seems to have paid off. Most of the highest-profile news organizations have signed licensing deals to at least be paid a little rather than be ripped off until reaching an uncertain verdict in court. Disney seems to be signalling that the same speculation rush is about to begin for audiovisual licensing, and it may have already secured the most favorable terms. 

This article originally appeared on Engadget at https://www.engadget.com/ai/disneys-deal-with-openai-is-about-controlling-the-future-of-copyright-213009504.html?src=rss