OpenAI faces multi-state investigation days after filing for IPO

A coalition of U.S. state attorneys general has launched a broad investigation into OpenAI, seeking documents related to advertising practices, data handling, and ChatGPT's safety, including its use by children. The probe began just days after the company confidentially filed for an initial public offering.

According to Reuters, OpenAI received a subpoena on June 12 requesting documents covering a wide range of topics. The Wall Street Journal, which first reported the investigation, said the request was issued by New York Attorney General Letitia James on behalf of a coalition that reportedly includes attorneys general from dozens of states.

The investigation covers OpenAI's advertising practices, user acquisition and retention strategies, handling of personal and health-related data, and the way its services interact with minors and older adults. Prosecutors are also seeking information about the company's deep learning models, internal policies, and what is known as AI sycophancy — a tendency for a model to agree with or reinforce a user's views even when doing so may be inappropriate or misleading.

OpenAI said it takes the issues seriously and intends to cooperate with the authorities.

The scrutiny comes amid broader pressure on the AI industry. In December 2025, a coalition of state attorneys general sent a letter to major AI developers, including OpenAI, Meta, Google, Anthropic, and xAI, urging them to strengthen protections for children interacting with chatbots.

The timing is particularly sensitive for OpenAI. On June 8, the company confidentially filed paperwork for an IPO that Reuters reported could take place as early as fall 2026. Some estimates suggest OpenAI's valuation could approach $1 trillion. For comparison, investors valued the company at $852 billion during its most recent funding round in spring 2026.

The investigation presents a potential challenge because companies preparing to go public are required to disclose material legal risks to investors. A multi-state probe focused on the safety of the product that generates the vast majority of OpenAI's revenue would likely qualify as such a risk.

Legal experts note that similar investigations have historically resulted in substantial settlements. Equifax agreed to pay up to $575 million following a multistate investigation into its data breach, while credit rating agency S&P paid $1.4 billion to settle claims brought by U.S. authorities.

How the OpenAI investigation will ultimately be resolved remains unclear.