According to Reuters, the defining legal battles of 2026 will be a stress test for the digital age, pitting old laws against new technology. Key cases include a proposed class-action in Seattle federal court where renters allege major landlords colluded to set rents using Yardi Systems’ pricing software, which the company denies. On the AI front, anonymous software coders are seeking billions from GitHub, Microsoft, and OpenAI in a San Francisco suit over code used to train Copilot, with a pivotal 9th Circuit appeal set for oral arguments on February 11. Meanwhile, Meta faces potentially massive damages under a 1967 California wiretapping law for its Pixel tracking tool, with a judge deciding what constitutes a “violation” at $5,000 a pop. Finally, over 2,000 cases consolidated in Oakland federal court allege social media platforms like Meta, Snapchat, Google, and TikTok fueled a mental health crisis in minors, with the first state trial starting in late January.
Algorithmic Collusion: Smoke-Filled Rooms in Code?
Here’s the thing about that rent-setting algorithm case. It’s the perfect, messy example of law lagging behind tech. The core question is brilliant: if competing landlords all use the same AI tool that suggests prices based on aggregated, non-public data from all of them, is that just smart business or is it basically a digital cartel? Yardi, of course, says it only uses a client’s own data and public info. But the plaintiffs’ lawyers are painting a picture of a silent, automated price-fixing scheme. This case could set a precedent that reaches far beyond apartments to hotels, insurance, and any industry that uses similar yield management software. If the plaintiffs win, it would force a complete re-architecture of how these business intelligence tools work. And honestly, it seems like the courts are the only ones who can draw that line now.
AI Copyright: The Billion-Dollar Training Data Fight
The Copilot case is arguably the big one. Billions in penalties are on the line, but the real stakes are the future of AI development itself. The fair use doctrine is being stretched like never before. Judges have to decide if scraping the internet to train a model is “transformative” or just massive, systematic copying. The fact that the 9th Circuit took this interlocutory appeal so quickly tells you how important it is. Tech companies are betting the farm on a broad interpretation of fair use. If the courts start narrowing it, the cost and complexity of building foundational AI models skyrockets. It’s not just about code, either. The dozens of unresolved suits against image and text generators are all waiting on similar rulings. This is the foundational legal battle for the entire AI industry.
Privacy Laws: From Wiretaps to Website Pixels
Applying a 1967 wiretapping law to modern web tracking is… a stretch. But that’s exactly what’s happening with California’s Invasion of Privacy Act and lawsuits targeting tools like Meta’s Pixel. The August verdict against Meta over the Flo Health app data was a shocker. Now we’re in the really scary part for tech companies: the damages phase. The law says $5,000 per violation. But what’s a violation? Is it every time a user opened the app? Every data point shared? Judge Donato’s upcoming decision on that definition could lead to a penalty in the hundreds of millions or even billions. Talk about an existential threat. It’s a blunt instrument, but in the absence of a comprehensive federal privacy law, plaintiffs and their lawyers are using whatever tools they have. And this one has very sharp, very expensive teeth.
Platform Liability: The New Tobacco Litigation?
The social media and video game addiction lawsuits feel like a generational shift. Consolidating over 2,000 cases against the biggest platforms isn’t small potatoes. The plaintiffs’ lawyers are explicitly invoking the playbook from cases against e-cigarette maker Juul, arguing that addiction itself is a valid legal injury. That’s a powerful framing. The first state court jury trial starts this month, and those are always wild cards. The platforms have a strong Section 230 defense, but these suits are cleverly crafted as product liability claims—arguing the algorithms and engagement features are a defective product. It’s an uphill battle for plaintiffs, but the sheer scale is unprecedented. Even if they only win a few, the discovery process alone could unearth internal documents that become a public relations nightmare for years. And as for the video game cases the judicial panel refused to consolidate, that might actually help plaintiffs by letting them shop for the most favorable local courts. This isn’t going away.
So what’s the bottom line for 2026? Courts are being forced to write the rulebook for the 21st-century economy, case by painful case. They’re deciding what’s fair, what’s collusion, what’s a violation, and what’s a defective product. The outcomes won’t just determine who wins a lawsuit. They’ll dictate the fundamental business models for AI, social media, and software-as-a-service for decades to come. The law is finally catching up. Buckle up, because it’s going to be a bumpy ride.
