LinkedIn Faces Lawsuit Over User Privacy Violations

LinkedIn, a platform under the ownership of Microsoft Corporation (NASDAQ: MSFT), is currently embroiled in a legal battle as Premium users have alleged that the company shared their private data for artificial intelligence (AI) model training without obtaining proper consent.

Incident Overview: The class action lawsuit was filed on Tuesday in San Jose, California. It seeks financial restitution for breaches of contract as well as violations of California’s unfair competition laws. The plaintiffs in the lawsuit are also demanding compensation of $1,000 for each individual under the federal Stored Communications Act.

The lawsuit claims that LinkedIn introduced a privacy setting in August of the previous year, which purported to give users more control over their data sharing choices. However, on September 18, the platform reportedly updated its privacy policy to indicate that user data could be utilized for AI training purposes.

According to the lawsuit, a frequently asked questions section indicated that users' ability to opt-out would not influence any training processes that had already taken place. The complaint accuses LinkedIn of trying to conceal its actions by adjusting its policy, suggesting that the company was aware of its violations concerning user privacy agreements.

In response, LinkedIn has labeled the allegations as “false” and “without merit.”

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Significance: The situation surrounding LinkedIn is part of a larger trend where AI startups like OpenAI and Anthropic have faced scrutiny for allegedly ignoring web scraping regulations. Similarly, Elon Musk's social media platform, X (previously known as Twitter), was found to be sharing user posts with xAI's Grok for training purposes.

Last year, LinkedIn noted a 10% increase in revenue year-over-year in the first quarter. The company emphasized that its AI-driven tools significantly impact how professionals approach selling, learning, and hiring practices. New AI features are assisting sales teams in emulating top-performing strategies, leading to more significant growth opportunities. In recruitment, LinkedIn has rolled out its inaugural AI agent, the Hiring Assistant, aimed at automating cumbersome tasks involved in the hiring process.

Meanwhile, Microsoft reported a first-quarter revenue of $65.60 billion, marking a 16% growth compared to the previous year.

Stock Performance: Following these developments, Microsoft's stock recorded an increase of 4.13% on Wednesday, closing at $446.20. However, shares experienced a minor decline of 0.27% in after-hours trading, dipping to $445, according to financial data.

This ongoing situation highlights the complex interplay between data privacy, user agreements, and the rapidly advancing field of AI.

LinkedIn, lawsuit, privacy