Elon Musk has intensified his legal battle against OpenAI, seeking a court injunction to stop the company’s transition to a for-profit structure. Musk alleges that this move is “illegal” and warns that the dominance of OpenAI’s ChatGPT in the artificial intelligence market poses a threat to its competitors, including his own AI startup, xAI. In court filings, Musk accused OpenAI and its CEO, Sam Altman, of abandoning the nonprofit mission they founded together in 2015.
He argues that OpenAI’s acceptance of billions in funding from Microsoft in 2019 marked a shift towards profit-driven objectives, deviating from its original purpose of advancing AI for the benefit of society. Musk’s legal team contends that OpenAI has become a monopolistic entity. They stated, “It cannot lumber about the marketplace as a Frankenstein, stitched together from whichever corporate forms serve the pecuniary interests of Microsoft and Altman at any given moment.” Musk also accuses OpenAI of entering agreements that allegedly violate federal antitrust laws, including deals that he claims restrict funding for potential competitors.
In response, OpenAI dismissed Musk’s allegations as baseless and reaffirmed its commitment to innovation and transparency. A spokesperson for OpenAI stated, “Musk’s filing again recycles the same baseless complaints and continues to be utterly without merit.” Reports indicate that OpenAI is in early discussions with the California attorney general’s office regarding its corporate restructuring.
This filing marks Musk’s third attempt to challenge OpenAI’s for-profit trajectory. He initially filed a lawsuit in California state court in February, withdrew it in June, and then refiled it in federal court in Oakland in August. In addition to seeking an injunction to halt OpenAI’s restructuring, Musk’s motion aims to prevent the company from forming exclusive agreements with investors that he argues are anti-competitive. While challenging OpenAI, Musk is also advancing his own AI startup, xAI, which was launched in 2023. The company has recently been valued at $50 billion, with its valuation more than doubling since May 2024.
Originally established in 2015 as a nonprofit organization with the mission to develop artificial intelligence for the greater good, OpenAI’s shift towards a for-profit model raises questions about its commitment to societal benefit. Recently, the company raised $6.6 billion, making it one of the most valuable companies in the world, with a valuation of $157 billion.
However, OpenAI’s nonprofit board chairman, Bret Taylor, has assured that the nonprofit will continue to play a significant role in any restructured entity. “Any potential restructuring would ensure the nonprofit continues to exist and thrive, receiving full value for its current stake in the for-profit,” Taylor stated.
The move towards a for-profit model has its roots in OpenAI’s 2019 decision to establish a capped for-profit subsidiary to offset the high costs associated with AI development. Tensions have historically existed between OpenAI’s nonprofit board and management, particularly regarding the balance between AI safety and commercial objectives.
This tension became public in 2023 when CEO Sam Altman was briefly ousted but was reinstated following a dispute over the company’s commercialization strategy.