OpenAI Faces Investigation by 42 State Attorneys General

A coalition of 42 state attorneys general opened a broad investigation into OpenAI in June 2026, examining how the company handles user data, whether its AI models behave in ways that harm vulnerable users, and how the company treats minors and seniors on its platforms.

The investigation is one of the largest coordinated state-level actions against an AI company to date. Attorneys general from both Republican and Democratic states joined the probe, signaling that concerns about OpenAI cross political lines.

The inquiry covers several areas. Investigators are looking at data collection and storage practices, whether ChatGPT and other OpenAI products engage in what researchers call "sycophancy," meaning the tendency to tell users what they want to hear rather than what is accurate, and whether the company has done enough to protect younger and older users from potential harms.

The investigation comes at a sensitive time for OpenAI. The company is preparing for an anticipated IPO in September 2026, and legal scrutiny could complicate that process. OpenAI has not issued a public statement in response to the probe.

OpenAI is also facing competitive pressure. ChatGPT's share of the global AI assistant market fell below 50 percent for the first time in June 2026, dropping to 46.4 percent. Google Gemini holds 27.7 percent of the market, and Anthropic's Claude holds 10.3 percent.

The state investigation adds to a growing list of regulatory challenges facing AI companies. Colorado's Consumer Protections for Artificial Intelligence Act is set to take effect June 30, and federal lawmakers are debating legislation that would preempt state AI regulations for three years.