The Lawsuit That Could Reshape the AI Industry Is Going to Trial
Musk’s argument — The lawsuit relates to the early days of OpenAI, which started as a nonprofit that was funded by around $38 million in donations from Musk. The Tesla CEO alleges that Altman and others fraudulently misled him about OpenAI’s plans to transition to a for-profit—a transition that resulted in zero profits for Musk, whose contributions were chalked up as charitable donations rather than seed investments, but which ultimately helped make OpenAI staff billions of dollars. Musk is seeking up to $134 billion in damages from OpenAI and Microsoft, calling the funds “wrongful gains.”
OpenAI’s rebuttal — OpenAI has strongly denied Musk’s allegations, calling them legal harassment, and noting that Musk is a competitor who owns a rival AI company. Musk, OpenAI alleges, in fact agreed that OpenAI needed to transition to a for-profit company, and only quit because executives rebuffed his effort to secure total control of the fledgling AI lab and merge it with Tesla. “Elon’s latest variant of this lawsuit is his fourth attempt at these? particular claims, and part of a broader strategy of harassment? aimed at slowing us down and advantaging his own AI company, xAI,” OpenAI said in a blog post on Friday. OpenAI also called Musk’s request for billions in damages an “unserious demand.”
Internal documents — Whichever way the judge ultimately rules, the case promises to be a bonanza for lovers of drama, intrigue, and OpenAI lore. Earlier this month, the judge unsealed thousands of pages of documents obtained during discovery, including excerpts from OpenAI co-founder Greg Brockman’s 2017 personal notes. “It’d be wrong to steal the nonprofit from [Musk]. To convert to a b-corp without him. That’d be pretty morally bankrupt,” reads one of these excerpts, which was cited by the judge on Thursday in her decision to let the case proceed to trial. (OpenAI said this quote was taken out of context by Musk’s legal team to make Brockman look bad, and that Brockman was referring to the possible outcomes of something that “never happened.”)
Implications for the world — It is no exaggeration to say that this lawsuit could be a matter of life and death for OpenAI. If the judge rules against it, OpenAI might be forced to pay Musk billions of dollars—money that could hurt, or even doom, its high-stakes effort to turn a profit by 2029. Other potential legal remedies might include unwinding OpenAI’s current structure, preventing any future IPO, or forcing Microsoft to divest—all things that could significantly complicate OpenAI’s future plans. A Musk victory would also be a strategic and symbolic victory for xAI—a company that has seemingly committed to building AI models with only the vaguest pretense of guardrails, as exemplified by the recent Grok scandal, in which Musk’s AI generated sexualized depictions of women and children. For all of OpenAI’s many alleged trust and safety failings, it undoubtedly takes its responsibilities on that front far more seriously than Musk’s companies do.
Can OpenAI Survive Elon Musk? | TIME |
