HubSpot last week triggered a firestorm among customers after announcing a plan to use some of the data they store with HubSpot’s customer relationship management app to power a forthcoming AI-powered feature.

While HubSpot reversed course four days later, the episode shows how sensitive customers are to software firms using their data in the AI era. HubSpot’s reversal is also another demonstration of the leverage that businesses have with the traditional software firms nowadays. We've noted before that some large customers have been able to shorten their contracts with software firms, which are keen not to lose clients given fears of rising competition from AI companies.

Let’s get back to HubSpot, whose shares are down 75% since early last year on fears AI would hurt its business and whose executives said sales growth would be slightly slower this year compared to last year.

On July 1, HubSpot announced it would use some customer data for a new AI feature that helps customers find new sales leads, which was set to launch next month.

HubSpot told customers in an email that it would collect such data by default and that customers would have to manually cut off access if they didn’t want Hubspot collecting it. HubSpot also said it may share their data, including “business contact details, employer information, and email deliverability signals,” with other customers. (HubSpot also said it had updated its terms of service, privacy policy and other customer agreements to reflect the change in its data collection practices.)