OpenAI hit by multi-state subpoena over ads and user data
A coalition of US state attorneys general has subpoenaed OpenAI over its ads, engagement design and handling of minors. For India, it is a preview of fights to come.
The News
A coalition of US state attorneys general has opened a formal investigation into OpenAI, serving the ChatGPT maker with a subpoena on Friday that demands answers across an unusually broad sweep of its business. The probe, first reported by the Wall Street Journal and Bloomberg, was led by New York's attorney general, though OpenAI declined to say which other states had signed on.
The questions reach into the core of how the company builds and monetises its products. Investigators are asking about OpenAI's advertising policies, the way it drives user engagement and retention, the much-criticised tendency of its models towards sycophancy, how it handles consumer and health data, and its treatment of vulnerable users including minors and seniors.
OpenAI confirmed it is cooperating. "AI is a new and powerful technology, and we work every day to safely bring its benefits to people in a responsible way," a company spokesperson said, adding that ChatGPT now offers "a more protective experience for minors and people experiencing difficult situations".
Why It Matters
The breadth here is the story. This is not a single-issue inquiry into, say, copyright or antitrust. It is a structural audit of a consumer product that, by OpenAI's own accounting, touches hundreds of millions of weekly users. When attorneys general bundle advertising, engagement design, data handling and child safety into one subpoena, they are treating a chatbot the way regulators once learned to treat social media platforms.
That comparison is instructive. The last time state attorneys general moved this aggressively as a bloc, it was against Meta in 2023, when more than 40 states sued over features they argued were addictive to teenagers. OpenAI is now stepping into that same line of fire, just as it pivots toward an ad-supported model to justify its valuation. Regulatory scrutiny of engagement mechanics tends to arrive precisely when a company starts depending on them for revenue.
Indian Angle
For India, OpenAI's second-largest market by users, the subpoena is a preview of arguments that domestic regulators are only beginning to rehearse. The Digital Personal Data Protection Act, whose rules were finalised through 2025, gives the government tools to question exactly the data-handling practices now under scrutiny in New York, and its provisions on processing children's data are stricter than most US state law. MeitY has already issued advisories nudging platforms to label AI output and protect minors.
The engagement and sycophancy questions matter here too. Indian users are heavy adopters of ChatGPT for everything from legal queries to mental-health conversations, often in contexts where local-language safeguards are weaker. Domestic challengers such as Sarvam and Ola's Krutrim have pitched sovereignty and cultural fit as selling points; a Western regulatory reckoning over trust and safety hands them a marketing argument that does not depend on raw model performance.
There is a competition dimension as well. As OpenAI builds advertising into ChatGPT, the Competition Commission of India will watch how a dominant foreign platform bundles ads into a tool used by millions of small businesses, the same dynamic it has probed with Google and large e-commerce players.
FAQ
When was the subpoena served?
On Friday, the day the investigation was first reported by the Wall Street Journal and Bloomberg. New York's attorney general led the action and served the subpoena on OpenAI.
Which states are involved?
OpenAI declined to specify. Only New York's role in serving the subpoena has been confirmed publicly so far, with the company saying it would not detail the other participants.
What exactly is being investigated?
A broad list: advertising policies, user engagement and retention, model sycophancy, consumer and health data handling, and the treatment of minors and seniors. It is a structural review rather than a single-issue inquiry.
Does this affect Indian users?
Not directly, but the issues mirror concerns India's DPDP framework and MeitY advisories are designed to address, making the US findings a likely reference point for domestic regulators and rivals alike.
This story was reported by TechCrunch. Read the full original coverage at TechCrunch.
Sources & Citations
Frequently Asked Questions
When was the subpoena served?
On Friday, the day the investigation was first reported by the Wall Street Journal and Bloomberg. New York's attorney general led the action and served the subpoena on OpenAI.
Which states are involved?
OpenAI declined to specify. Only New York's role in serving the subpoena has been confirmed publicly so far, with the company saying it would not detail the other participants.
What exactly is being investigated?
A broad list: advertising policies, user engagement and retention, model sycophancy, consumer and health data handling, and the treatment of minors and seniors. It is a structural review rather than a single-issue inquiry.
Does this affect Indian users?
Not directly, but the issues mirror concerns India's DPDP framework and MeitY advisories are designed to address, making the US findings a likely reference point for domestic regulators and rivals alike.