Disney signs $1 billion licensing deal with OpenAI, is big mad at Google

Remember six months ago, when we published sunny coverage of Disney‘s lawsuit against Midjourney, with predictions that the Mouse House might be the one to halt the ever-widening omnipresence of generative AI?

Yeah, so it just did a deal with OpenAI.

We’re not exactly surprised, considering last month, CEO Bob Iger told shareholders that Disney was in the midst of “productive conversations” with unnamed AI companies, and that sometime in the future, its streaming service Disney+ will open the floor for AI-generated UGC featuring proprietary characters.

“The other thing that we’re really excited about, that AI is going to give us the ability to do, is to provide users of Disney+ with a much more engaged experience, including the ability for them to create user-generated content and to consume user generated content–mostly short-form–from others,” Iger said.

Now we know that “ability” is going to come from OpenAI.

Two things have happened in the last 24 hours:

• Disney announced it’ll invest $1 billion into OpenAI as part of a three-year licensing deal. Said deal will allow OpenAI’s video generator Sora to output content that contains characters from Disney properties, including the various Marvel, Pixar, and Star Wars franchises.
• Disney immediately turned around and went after OpenAI competitor and YouTube parent Google, filing a cease-and-desist that accuses it of copyright infringement on a “massive scale.”

“Google has deeply embedded its infringing video and image AI Services into its broad family of products and services actively used by over a billion people,” Disney said in the letter. “This multiplies the scope of Google’s infringement, and harm to Disney’s intellectual property, not to mention the ill-gotten benefits Google enjoys from its unauthorized exploitation of Disney’s copyrighted works.”

Disney specifically cited Google’s tools Gemini, Veo, Imagen, and Nano Banana, and said these models have generated “pristine” images/videos of Star Wars and Marvel characters in response to user prompts.

While this is the first time Disney has publicly swung at Google, things have apparently been happening behind closed doors; Disney said it’s been telling Google about its IP concerns for months, but “[i]f anything, Google’s infringement has only increased during that time,” it alleged.

“Google’s AI Services are designed to free ride off Disney’s intellectual property,” Disney wrote. “Google has refused to implement any technological measures to mitigate or prevent copyright infringement, even though such measures are readily available and being used by Google’s competitors. Instead, Google continues to directly exploit Disney’s copyrights for commercial gain.”

While we don’t doubt that litigious Disney has been pursuing Google’s alleged infringement for months, it is worth noting–in context with the new OpenAI handhold–that Google has emerged as OpenAI’s frontrunning competitor in AI. It debuted the latest version of its chatbot Gemini last month, and saw quick comparisons to OpenAI’s ChatGPT.

Much of that comparing significantly favored Google, prompting (no pun intended) OpenAI CEO Sam Altman to send a company-wide memo declaring a “code red” effort to improve ChatGPT ASAP. To make room for engineers to work on GPT improvements, OpenAI would push back its advertising initiative, plus development on AI “agents” for shopping and wellness and development on Pulse, its personal assistant bot, Altman said.

What does all this leave us with? Honestly, we don’t know. The AI bubble has been swelling for months now, with billions upon billions of dollars of investment from big tech, startups, and Silicon Valley VCs alike. With the Disney x OpenAI deal, the biggest entertainment company in the world has taken sides.

Mostly we’re hoping that for OpenAI’s sake, it puts some pretty serious guardrails on what Disney content people can generate. Otherwise that mythical Disney vault might actually become reality.