Sharp Tech · 2025-07-10 · 15 min

(Preview) Apple Searches for an AI Partner, A Second Fair Use Ruling and Reckoning with Reality, The F1 Movie and Related Matters

Andrew SharpBen Thompson

Podcast ↗

TL;DR

Andrew Sharp now leans toward treating LLM training as fair use, particularly where the resulting output is not itself infringing and the alleged harm is speculative future market harm. He still sees an uncomfortable “transfer of wealth and long-term profit incentives” from millions of creators to an industry dominated by companies worth roughly $5 trillion, but copyright cannot consistently address that harm without evidence of present market injury.
Meta’s victory does not establish that training Llama on copyrighted books is categorically lawful. Judge Vince Chhabria ruled that these plaintiffs made the wrong arguments and lacked a record of lost market opportunities; Andrew praised that as an “intellectually honest” reckoning with both legal limits and unprecedented technological scale.
Ben Thompson thinks Chhabria’s suggestion that stronger plaintiffs might win is “a fantasy.” Proving harm would require identifying individual purchases never made and aggregating them at scale; the harm might be real, but under the existing evidentiary standard it remains “in the noise.”
Both hosts agree that existing copyright and antitrust doctrines cannot address every valid concern at issue here. Ben’s recurring answer is that policymakers must pass a new law, then openly debate its trade-offs, rather than stretch doctrines that “don’t really apply here.”
An affirmative-permission regime might punish lawful AI developers while empowering actors willing to train on pirated or online material. Ben hedged that the UK had passed or was proposing something analogous—“I might be wrong”—but his realpolitik conclusion was categorical: only companies trying to comply would suffer.
Heavy licensing obligations could entrench incumbents without reversing publishing’s existing structural decline. Ben said “the horse is halfway across the country,” while Andrew and Ben argued that burdens on AI startups would favor incumbents. Ben invoked YouTube, whose elaborate copyright machinery lets it pay rights holders and avoid abusive takedowns of videos with background music, but also means “there will never be another competitor to YouTube.”
Ben still sees value in human media’s shared, one-to-many experience. Personalized AI is “all custom to you,” whereas tens of thousands hearing the same imperfect human podcast gain a common experience—an argument he admits is “totally talking my personal book.”

Digest · the substance, structured for research

1. Andrew’s anti-monopoly instinct meets copyright’s limits

Andrew remains instinctively uncomfortable with fair-use treatment: millions of uncompensated creators enable an industry dominated by companies worth roughly $5 trillion, transferring market power and future profits.
He nevertheless leans toward fair use after reconsidering the copyright context: courts would be addressing speculative future harm, not demonstrated present harm, where the output itself is not infringing.
The scale makes this unlike prior copyright disputes, but Andrew thinks the law cannot consistently prevent speculative market harm without a record of actual injury.

2. Chhabria reaches the right result—but Ben calls a better case illusory

Andrew praised Chhabria for acknowledging threats to creators while ruling that these authors had not established lost market opportunities.
Ben accepted the outcome but called the suggestion that plaintiffs could build a better case “a fantasy”: unmade purchases cannot be observed at scale, leaving genuine harm “in the noise.”

3. Valid policy concerns require new law

Ben framed the dispute as a replay of their aggregator debates: antitrust could not fix those concerns, and copyright cannot fix these. A remedy needs new legislation.
Andrew favored Chhabria’s warning against “robotically applying concepts from previous cases”; fair use should adapt to major technological change, despite Ben’s “living Constitution guy” tease.

4. Permission rules could reward evasion and incumbency

Ben cautiously referenced a possible UK approach—“I might be wrong”—and considered a default requiring affirmative permission before copyrighted work enters training.
His realpolitik objection: copyrighted works can remain available online or through piracy, so compliant developers bear the costs while unscrupulous competitors gain an advantage.
Both argued that burdens on AI startups will not repair publishing’s structural decline and could favor incumbents. YouTube’s licensing system works, Ben noted, but its complexity means “there will never be another competitor to YouTube.”

5. Copyright protects incentives, while shared human broadcasting retains value

Ben called copyright a “government-granted monopoly,” not a natural right: society accepts market distortion to encourage creation, but intellectual-property protections can also produce abuse, high prices, and counterproductive effects.
Andrew contrasted creator safeguards with limiting Google, Meta, or Amazon take rates across hundreds of dependent industries.
Ben’s point about media is that personalized AI is “all custom to you,” while a human broadcast retains value by giving many people one shared experience. He acknowledged that this is “totally talking my personal book.”

Andrew Sharp

Hello, and welcome to a free preview of Sharp Tech. All right, elsewhere this week, on Stratechery, you wrote about a follow-up opinion—a separate, parallel opinion—regarding AI training and the fair-use doctrine. I'll read from Bloomberg Law:

“Meta escaped a first-of-its-kind copyright lawsuit from a group of authors who alleged the tech giant hoovered up millions of copyrighted books without permission to train its generative AI model called Llama. San Francisco federal judge Vince Chhabria ruled Wednesday that Meta's decision to use the books for training is protected under copyright's fair-use defense, but he cautioned that his opinion is more a reflection on the authors' failure to litigate the case effectively.

“This ruling does not stand for the proposition that Meta's use of copyrighted materials to train its language models is lawful,” Chhabria said. “It stands for only the proposition that these plaintiffs made the wrong arguments and failed to develop a record in support of the right one.”

So, Ben—

Ben Thompson

No, this rundown says you're going to ask me whether I have some takes. I've already written about this. I podcasted about it. I'm dithering. You go first. What's your take?

Andrew Sharp

Well, I didn't love the podcast we did on this issue right before summer break.

Ben Thompson

Oh.

Andrew Sharp

Well, no, I wasn't just agonizing the entire break, but maybe for an hour or two afterward. It just didn't sit right. I didn't have that much time to prep, and I hadn't fully formulated exactly what I think about this issue and exactly why I ultimately lean toward treating training as fair use.

Ben Thompson

A week and a half of baking. What's coming out of the oven here?

Andrew Sharp

Oh, boy. Well, I will say I loved Judge Chhabria's opinion. I just thought his explanation of all of it was a much more intellectually honest approach to dealing with the realities in play here and the stakes for the future of creators. So do you want me to read from Judge Chhabria, or do you want me to run through my whole thought process on this?

Ben Thompson

You're in charge.

Andrew Sharp

I actually wrote it down the other night.

Ben Thompson

I'm letting you cook. I'm going to restrain myself, and you tell me why Judge Chhabria got it right.

Andrew Sharp

Am I in the catbird seat here?

Ben Thompson

You're in the catbird seat. Exactly.

1. AI Training Transfers Creator Wealth

Andrew Sharp

All right. So let me run through the way I think about this issue. I'll wear my anti-monopolist hat here and say that I'm instinctively uncomfortable with treating LLM training as fair use. It does seem clear that LLMs will harm the long-term market for books, journalism, and other creative work, probably including human-generated music, movies, and TV shows.

Ben Thompson

Human-generated podcasts?

Andrew Sharp

Well, maybe not podcasts. I don't know. How big is the market really, if we're being honest?

Ben Thompson

Look, it's not big enough to get you a private jet from Nantucket, so it's big enough to get to Nantucket—

Andrew Sharp

I know.

Ben Thompson

—but you might get stuck there.

Andrew Sharp

I'm waiting for the superintelligence jet to come through.

Ben Thompson

That's right.

Andrew Sharp

God, call me, Zuck.

If we know that's the direction this is going, and that it's only possible for it to go in that direction if these models are allowed to train on the work of millions of creators who own their IP without compensation, then we're ultimately talking about a transfer of wealth and long-term profit incentives from one industry that thrives on the work of millions of creators to an industry dominated by $5 trillion companies.

So I'm instinctively uncomfortable on that basis. That transfer of market power from creators to model makers without any real compensation seems antithetical to the concept of fair use, even if it's not necessarily antithetical to the technical letter of fair-use law.

And so, as I was agreeing with you on the last podcast, I was thinking, “Eh, I don't know. I feel like I'm betraying my roots here.” Then, thinking it through further, in a copyright context, I think courts are really stretching the boundaries of what copyright law is supposed to protect and enforce if they're talking about LLM output that is not itself infringing, and then trying to prevent speculative market harms in the future rather than actual market harms in the present.

I don't know that the law can really go that direction on a consistent basis, and that's ultimately where Judge Chhabria netted out here, while also reckoning with the reality that this isn't a bunch of schoolchildren reading books, then ultimately learning to write books and competing in the same market years down the line.

The scale of this does render it a completely separate problem from anything that the law has tried to reckon with before. I appreciated him for stating that honestly and then also coming to the conclusion: “Well, there's no real record of harm for these authors in terms of their market opportunities, and I can't rule against Meta in this case.” Does that make sense?

Ben Thompson

I completely agree.

Andrew Sharp

There you go.

2. Copyright Cannot Solve AI Harms

Ben Thompson

No, and a little bit of a stand. So I appreciate his intellectual honesty by the end because the first 3 quarters of that opinion were a little bit of living in a fantasy land.

Andrew Sharp

Okay.

Ben Thompson

And this bit about their needing to make a better case is a fantasy. There's no case to be made. That's the issue.

Andrew Sharp

That's the issue, yeah.

Ben Thompson

Right? And so I'm glad you mentioned the anti-monopolist roots, because this is actually a replay of our debates about aggregators and monopoly.

Andrew Sharp

Yeah.

Ben Thompson

My whole point all along is I actually agree with you. I agree with all the concerns. But antitrust law cannot fix the issues you're worried about. It sounds like we fast-forwarded to the end here, which is that copyright law can't fix the issues you're worried about, either.

If you want to address these issues, it's going to require a new law and a new approach. Then we have a separate debate about the trade-offs with some sort of law that explicitly addresses this.

Andrew Sharp

Mm-hmm.

Ben Thompson

But just like the monopoly thing, that's been my thing all along. I'm like, “I get the point of view, but you have to pass a new law.” You can't retrofit antitrust to this because it doesn't fit, and it's what you just said about copyright.

It's like, yeah, all these concerns are real and valid, but Judge Chhabria, to his credit, by the end, he's like, “Yeah, but it doesn't really apply here.” My critique of him is his suggestion that you could ever find evidence to apply.

What he needs evidence for is purchase decisions not made by individuals. How are you going to get that data? It's—

Andrew Sharp

Right, not made by individuals, not only today—

Ben Thompson

At scale.

Andrew Sharp

I mean, I think he's more broadly concerned with the long-term implications of this sort of behavior.

Ben Thompson

Right, which are very real. Those are totally real, right? But if the standard of the law is that you have to find explicit market harm, it's all in the noise, right? The harm's real.

Andrew Sharp

Very fuzzy.

Ben Thompson

Yeah, exactly.

Andrew Sharp

And I like that he said, “Meta makes the mistake the Supreme Court instructs parties and courts to avoid: robotically applying concepts from previous cases without stepping back to consider context. Fair use is meant to be a flexible doctrine that takes account of significant changes in technology.”

That's how I would like law to work: to be elastic in some respects and adaptive.

Ben Thompson

Oh, living Constitution guy.

Andrew Sharp

Yeah.

Ben Thompson

This takes me back to my constitutional law debates in college, but yes.

Andrew Sharp

Look, we're not going to turn this into a law school seminar.

Ben Thompson

I'm down with it. They're my favorite classes. I loved them.

Andrew Sharp

I think his version of understanding the law, what it can do, and what it can adapt to makes more sense and resonates with me, as opposed to robotically applying past precedents to try to grapple with some of these technology challenges.

But you mentioned that if it were to go to Congress, you would still probably come down on the side of the AI companies here. So explain your logic.

3. Opt In Rules Reward Pirates

Ben Thompson

Well, this whole question runs in multiple directions. I think if you were to pass a law—which I think the UK either passed or is proposing—where, basically, by default, you have to get affirmative permission to include copyrighted works. I might be wrong on this, but you can imagine a law like that.

Good luck. How is that going to happen? Meanwhile, all those works that are available can be pirated, can be online, or whatever it might be. Unscrupulous actors will have access to them. It puts us in a situation where you're punishing the people trying to follow the law.

And so I don't like this, but it's one of those situations where you have to look at reality and have a realist—in foreign-policy terms—sort of view of the world.

Andrew Sharp

Mm-hmm. Realpolitik.

Ben Thompson

Which is—

Andrew Sharp

Let's do it.

Ben Thompson

If you pass this sort of law, the only companies that are going to suffer are the ones that are trying to follow the law, and you're actually helping and empowering the companies that don't care. That doesn't seem ideal to me.

Andrew Sharp

Yeah. Well, that makes sense. For me, as I was thinking about it, I do think there's room to step back and say, “What sort of incentive structure do we want to create and protect for writers or musicians or film studios?”

But the reason I'm less passionate about pushing for statutory protection for that sort of class versus, say, pushing for laws that limit the take rate for Google or Meta or Amazon as they deal with businesses all over the world is that, in the latter case, we're talking about transfers of wealth from hundreds of different industries that are all beholden to tech platforms that essentially operate as utility companies.

In that case, I think the entire economy could be healthier and more dynamic if we're not limiting the upside in hundreds of different industries that have to pay their pound of flesh to Google or Facebook. But in AI, I think we're talking about erecting barriers to protect an industry of creators that is already facing so many structural threats.

Ben Thompson

Right, they're already doomed, so who cares?

Andrew Sharp

Just because of the mere existence of technology.

Ben Thompson

That's right.

Andrew Sharp

And so, as far as realpolitik is concerned—

Ben Thompson

No, the internet has already decimated all these folks. Exactly.

Andrew Sharp

Yeah. And so, what are you actually trying to—

Ben Thompson

Yeah.

Andrew Sharp

…protect by imposing—

Ben Thompson

The horse is halfway across the country at this point.

Andrew Sharp

…huge burdens? Yeah. And so I think you just have to be real with it.

4. Copyright Is A Government Monopoly

Ben Thompson

Well, I think the other angle, too, in appealing to your anti-monopolist side, is that copyright is a government-granted monopoly, right?

Andrew Sharp

Yeah.

Ben Thompson

That's the tension with that. People act like it's this God-given gift. It's like, no, this is an anti-competition thing that we do because we value the incentives of doing creative things. But all intellectual property law is government-granted copyright. It's by definition market-distorting.

Andrew Sharp

I mean, you can get really abstract and say that that's also true of property law generally, but we don't have to go full socialist here.

Ben Thompson

Well, we have a Second Amendment discussion here. Step on my lawn, Andrew.

Andrew Sharp

That's right. The law of the land out—

Ben Thompson

That's right.

Andrew Sharp

…there in Wisconsin.

Ben Thompson

So, yeah, that's a factor for me. I think that a lot of copyright and intellectual property laws act like they're laws of nature, but they're not. There are very real challenges and issues that come from government-granted monopolies like patents and copyrights, which lead to abuses and high prices and can actually be counterproductive.

Given that, I'm hesitant to layer on all these potential extra problems in service of a government-granted monopoly for folks who, to your point, have made it this far and are probably going to be fine.

5. Human Broadcasting Still Matters

The other thing is that all the AI is individual. It's all custom to you. I continue to believe—and again, I'm totally talking my personal book here, so take it for what it's worth—that there are tens of thousands of people listening to this podcast. They can talk to other people. It's a common experience. It's something that has value by virtue of being one thing broadcast to many people, right?

Andrew Sharp

Yeah.

Ben Thompson

And having the human component—and I think I mispronounced the name of someone earlier—we're doing our part to stay unique. To that point, the horse is gone.

6. Regulation Favors AI Incumbents

Andrew Sharp

Right. Well, imposing huge burdens on AI startups around the world isn't going to change—

Ben Thompson

Oh, that's right.

Andrew Sharp

…the structural forces—

Ben Thompson

Totally right.

Andrew Sharp

…that are ravaging publishing.

Ben Thompson

All you're doing is favoring the incumbents even more—

Andrew Sharp

Yeah.

Ben Thompson

…because they can jump through all the hoops and figure it out. It's like YouTube figured out a way to let you have copyrighted music in your videos. They just pay everyone. This whole convoluted system is great. I'm glad they got it to work. It sucked when people had birthday videos taken down because there was copyrighted music in the background.

There will never be another competitor to YouTube. All right, and that is the end of the free preview. If you'd like to hear more from Ben and I, there are links to subscribe in the show notes, or you can also go to sharptech.fm. Either option will get you access to a personalized feed that has all the shows we do every week, plus lots more great content from Stratechery and the Stratechery Plus bundle. Check it out, and if you've got feedback, please email us at email@sharptech.fm.