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Adam Furmansky
As highlighted in Aon’s Navigating AI-Related Risks: A Guide for Directors and Officers, directors and officers must navigate a complex landscape of regulatory and legal risks concerning artificial intelligence (AI). The evolution and transformative nature of AI, along with companies’ growing reliance on AI, provide fertile grounds for AI-related claims. Three recent cases illustrate the challenges for directors and officers and the evolving nature of the AI claim environment.
Social News Aggregator’s AI-Related Litigation
▼A popular social media platform recently faced a securities class action lawsuit due to AI-related changes in a search engine.1 In 2024, the owner of an unrelated search engine implemented AI Overviews, a feature that provides concise search results using generative AI. This led to a purported "zero-click search" phenomenon, where users received answers directly from the search engine without visiting external websites. Allegedly the social media platform consequently experienced a slowdown in user growth, impacting its advertising revenue.
The lawsuit, filed in June 2025, alleges that the platform’s executives failed to disclose the impact of the search engine’s AI changes on its user traffic and revenue. The complaint claims that the company’s public statements were misleading, violating securities laws. The complaint alleges that the defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.
Technology Company’s AI-Related Securities Suit
▼A large technology company also faced a securities class action lawsuit in June 2025, alleging that the company misled investors about the launch of AI-based features on smartphones.2 The plaintiff claims that the technology company’s share price fell after the promised rollout was delayed.
Artificial Intelligence Enabled Precision Medicine Solutions Securities Suit
▼A company claiming to provide AI-enabled precision medicine solutions was accused of overstating its AI capabilities and generating most of its revenue from acquisitions and data licensing rather than AI solutions.3 The securities lawsuit alleges that the company inflated contract values and misrepresented its business prospects, leading to a 20% decline in share price following a critical report by a short seller.
Claim Environment
▼The above cases underscore the importance of directors and officers ensuring transparency and accuracy in public statements about AI capabilities to avoid legal liabilities and reputational damage. While there have been numerous “AI-washing” claims and litigation over copyright issues, the Social News Aggregator matter presents perhaps the next frontier in AI litigation. Companies that downplay the risk to their business due to AI—whether by minimizing the systemic risk AI may cause if not properly implemented with sound oversight and governance, or by mischaracterizing risks in AI adoption by customers, competitors, vendors, or suppliers—face increased litigation risk.
Managing artificial intelligence risk involves implementing strong corporate governance practices, such as establishing clear policies and procedures for AI deployment and ensuring transparency in AI-related communications. Directors and officers should prioritize regular audits and risk assessments to identify potential AI-related liabilities and ensure compliance with ethical standards. Additionally, a comprehensive directors and officers insurance policy can provide financial protection against claims arising from AI-related misrepresentations or failures, safeguarding corporate leaders from potential legal and financial repercussions.
1 - Compl. Tamraz v. Reddit, Inc. et al, No. 3:25-cv-05144 (N.D. CA, 2025)
2 - Compl. Tucker v. Apple Inc. et al, No. 3:25-cv-05187 (N.D. CA, 2025)
3 - Compl. Shouse v. Tempus AI, Inc. et al, No. 25-cv-06534 (N.D. Ill., 2025)
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