Good morning from the Financial Times, today is Tuesday, May 6th, and this is your FT News Briefing.
Open AI is ditching restructuring plans, and the U .S. stock market has clawed its way back from a tariff -led shock.
Plus a lawsuit against Meta will be a critical test for AI copyright infringement.
I'm Mark Filippino and here's the news you need to start your day.
Open AI is going to stay a non -profit.
The decision comes after significant backlash to open AI's proposed corporate restructuring to a for -profit company.
company. Some of that backlash came in the form of a lawsuit from former co -founder Elon Musk.
Critics say the company might lose focus on its mission if it were to convert to a for -profit.
That mission is to make sure that artificial intelligence benefits humanity.
CEO Sam Altman denied that outside pressure motivated the decision to stay a non -profit.
He said, quote, we're all obsessed with our mission.
You're all obsessed with Elon.
Trillions of dollars in value disappeared from the stock market after so -called Liberation Day.
That was April 2nd, the day that U .S. President Donald Trump unveiled his global tariff policy.
The S &P 500 tanked by as much as 15 percent in a rollercoaster ride of trading in the days after, but now the major indices are pretty much back to where they were before Trump launched his trade war.
My colleague Kate Duguid has been tracking that progress and she's here with me now.
Hey, Kate. Hi. So Friday was a big day on Wall Street and it kind of puts a point on this run we've been seeing in equities.
The S &P 500 jumped 1 .5%.
What were investors so excited about at the end of last week?
Investors were excited about some strong job market data that came out on Friday morning, which had also affirmed some second tier job data that had come out earlier in the week.
Basically, we saw the data over the course of the week, painted a picture of a labor market that remains resilient.
That's also, you know, we haven't seen huge impacts on earnings yet.
At least for now, tariffs have not necessarily been affecting economic data very much. So that explains last week, Kay.
But why have indices more generally recovered their earlier losses?
You know there's hope that a lot of these trade deals will get done in the coming months that we will see lower tariffs on China and that there has been a little bit of a detente between the two countries, and that across the board there will be these sort of one -off trade deals with all of our trading partners.
So there's hope that this will be resolved, that the tariffs will not stay in place as written.
The question is whether or not that's somewhat unfounded and whether or not even 10 % tariffs will have a significant impact on earnings on the labor market and on the U .S. economy more broadly.
Do you think the global economy is out of the woods yet?
You mentioned a lot of this reaction is to backward looking data.
We are definitely not out of the woods.
You know, just because the effects of tariffs have not yet shown up in the economic data doesn't mean that they won't.
We know that a lot of companies in their earnings guidance have said that they have no idea what to expect in coming quarters.
They've pulled guidance or they've offered different scenarios, like United Airlines offered two different scenarios for their year ahead.
One was if tariffs stay in place and one was if tariffs are dramatically reduced.
So there's a lot, a lot of uncertainty.
And I think that investors may be buying the dip, maybe trying to take advantage of some short term moves right now, but I don't think that this is the end of the rations in the market.
What does all the volatility from the past few months tell you about trading in the age of Donald Trump and Trump tariffs?
So one thing that's crazy is that political headlines matter so much more to the market than they normally do.
And they matter more than earnings, they matter more than economic data.
You know, I was talking to an investor a week or two ago who said that, you know, normally he's glued to his Bloomberg but he is spending just as much time following these headlines that come out of DC every day.
The difficulty with that, though, is that it's far less certain, it's far less concrete than economic data.
So I think that we'll see a lot of continued volatility and it's going to be a lot of people guessing what they think particular political moves mean, rather than having more certainty on sort of the direction of the economy, as would be the case if you were following just the economic data.
That's the FT's Kate Duguid, she's our US markets editor.
Thanks Kate. Thank you.
The Bank of England meets this Thursday and investors think it will lower interest rates.
BoE governor Andrew Bailey has made it clear that tariffs from the U .S. will impact the U .K. economy.
Investors believe a quarter point rate cut this week is pretty much a surefire bet.
They even think a few members of the Monetary Policy Committee will vote for half a point cut.
What's more, investors expect three more rate cuts this year.
That would bring the central bank's benchmark rate to three and a half percent.
Now, the Federal Reserve also meets this week, but the expectation there is the U .S. central bank will keep rates on hold.
The Fed is still in wait -and -see mode to evaluate the full effect the tariffs will have on the U .S. economy.
Artificial intelligence models can write just about anything—science fiction, epic poems, Greek tragedies, but all that literary ingenuity requires a lot of information from human authors, and last week some of those authors began legal proceedings against Meta.
They say the tech giant used their work without permission to train its model called Llama.
My colleague Christina Kridle has been covering the case.
Hey Christina! Hi! So Christina, who are these authors exactly And what are they accusing Meta of doing?
Currently? It's a group of around 13 authors who are bringing this case against Meta, includes Richard Cadre and comedian Sarah Silverman.
And it's all centered on this pirated database called LibGen, which has millions of books on it, academic articles and comics often taken without the consent of the creators.
It has come into legal battles before people have tried to take it down.
However, it remains up and Metta used this database they torrented it to train its Llama AI models.
The plaintiffs are alleging that they should have been compensated for this.
And that's really what this is based on.
It's whether tech companies can use copyrighted material like this, to train AI models.
Okay, and how has Metta responded?
So Metta has argued that there was no market at the time for licensing these kinds of materials.
And in court last week, it said that we couldn't have gone to each of the authors individually to do this, it would have been too complicated.
In addition, Metta is also leaning on this fair use defense, it's arguing that because it's developed these transformational open source AI models that are basically enabling all of the public to be more innovative, productive, and creative, that it can use these copyrighted materials.
Well, Christina, how did the judge seem to respond to these arguments this past Thursday?
So in the hearing on Thursday, the judge was really looking at whether copyrighted works could be used in AI models to then create very similar works.
So if these AI models could reproduce very similar kind of books, then in the future, the market for the works could be completely eliminated.
He said if you look at what happens in the future to the market for those works and possible compensation and livelihoods of authors, he said that the transformative use case comes close to obliterating this market.
So that's really what the judge is grappling with here.
So then what are the next steps in this trial?
Well, it's up to the judge now to decide whether it's going to go to a trial with a jury.
And if that does happen, then the plaintiffs might decide to bring on more authors whose works have been used in this database and turn it into a full class -action lawsuit.
So that could happen.
Or the judge might rule in Lumetri's favor and say that it is fair use, which would be a really important decision for the industry more generally.
There have been a flurry of lawsuits.
I think it's several dozen at the moment around the world looking into how AI companies have used copyrighted works.
This is one of the most far along.
So I think every single company and also those who have been affected by their work being trained are looking to see what legal precedent there can be going forward. Soterios Johnson, Jr. Kristina Crittle is the FT's technology reporter.
Thanks Kristina. Thank you.
You can read more on all these stories for free when you click the links in our show notes.
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