Elon Musk is reigniting a legal conflict with OpenAI, aiming to annul the company's partnership with Microsoft.
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| Elon Musk Slaven Vlasic/Getty Images for The New York Times |
The lawsuit, lodged in the Northern District of California on Monday, accuses the company of fraud and breach of contract. Musk claims he was deceived when he invested approximately $45 million into the AI initiative, which he argues has betrayed its original mission to safely advance the technology “for the benefit of humanity.”
According to Musk, CEO Sam Altman unlawfully teamed up with Microsoft to create a network of illicit affiliates and strip the nonprofit sector of its resources and personnel, violating their agreement.
Musk is demanding a court order to invalidate OpenAI’s exclusive license with Microsoft, which grants Microsoft unique access to the core code of GPT-4. He is also seeking triple damages and a return of profits linked to his investments in the company. The lawsuit names Altman, president Greg Brockman, and numerous subsidiaries.
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Marc Toberoff, Musk's lawyer who often represents creators in copyright disputes with studios, emphasizes that if AI tools are controlled by a few companies like OpenAI and Microsoft, it poses a threat to creative talent. “This case is about much more than money; the future of AGI is at stake,” he asserts.
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Musk's connection to OpenAI dates back to 2015 when he co-founded the company alongside other prominent Silicon Valley investors. The lawsuit highlights messages from Altman as evidence of fraud, including an email where Musk was assured that “The technology would be owned by the foundation and used ‘for the good of the world.'”
According to OpenAI's certificate of incorporation, a legal document detailing the company's formation, OpenAI committed to “open source technology for the public benefit.” It also stated that the company “will not be organized for the private gain of any one person” and “no part of the net income or assets of this corporation shall ever inure to the benefit of any director, officer or member.”
The lawsuit further outlines Microsoft’s initial attempts to engage with OpenAI while Musk was still involved. In 2016, the complaint alleges that Satya Nadella’s company proposed selling “Compute” to OpenAI at a significant discount in exchange for the company’s public endorsement of Microsoft’s products.
“This actually made me feel nauseous,” Musk wrote to Altman, according to the lawsuit. “It sucks and is exactly what I would expect from them.”
Later that year, the two companies announced a partnership, granting OpenAI access to Microsoft’s cutting-edge technology for large-scale AI training.
However, after Musk departed the board in 2018 due to a potential conflict of interest with Tesla, which was intensifying its AI focus, he alleges that Altman steered the company towards creating multiple for-profit entities. This included the establishment of OpenAI, L.P., a “capped-profit company.”
With the creation of this for-profit arm, Altman is said to have transferred staff and assets from the nonprofit division to the new entity. The lawsuit claims that OpenAI’s numerous other affiliates were integrated into a “corporate web” designed to profit from the nonprofit’s assets, describing it as a “shell game.”
“Just follow the money,” the complaint asserts. “The nonprofit’s 2022 IRS tax return showed just $44,485.00 in revenue, but one year later, OpenAI overall reportedly generated hundreds of millions of dollars.”
Musk also accuses Altman of withholding and misrepresenting information to the board, including allegedly lying in business dealings. In negotiations with the nonprofit, Altman purportedly claimed to be an independent board member of OpenAI Startup Fund while failing to disclose his ownership of the company.
Other allegations of self-dealing include OpenAI’s partnership with Reddit, which allows Reddit’s content to appear on ChatGPT, and a $51 million chip deal with Rain, another company where Altman is a significant shareholder, according to the complaint.
“And currently, based on available information, OpenAI is negotiating a deal with Helion Energy (in which Altman holds a significant stake) for [it] to purchase substantial amounts of electricity to power its data centers,” the lawsuit states.
On “The TED AI Show” podcast, former OpenAI board member Helen Toner, who was involved in ousting Altman in November before his reinstatement, remarked: “Sam had made it really difficult for the board to” accomplish its mission of safely developing the technology by “in some cases, outright lying.”
The lawsuit alleges that Musk, in collaboration with Microsoft, took control of the company’s board to further erode safety measures with the intent of maximizing profits.
This complaint comes after Musk dropped a similar lawsuit against OpenAI and Altman in June without providing a reason. He has publicly criticized the company for straying from its original framework.
Last year, Musk launched xAI, which has since achieved a valuation of $24 billion.
Musk is represented by Toberoff, renowned as one of the leading copyright termination lawyers in the entertainment industry. He has handled lawsuits for the estate of Steve Ditko, co-creator of Spider-Man and Doctor Strange, the heirs of the writer behind the magazine story that inspired Top Gun, and Lance Hill, who penned the screenplay for Road House.
