Elon Musk's legal team has filed a motion for a preliminary injunction against OpenAI, its leadership, and key partner Microsoft. The filing, submitted to the U.S. District Court for the Northern District of California, alleges that OpenAI and its collaborators are engaging in practices that harm competition. Musk’s counsel claims these actions breach agreements and undermine the nonprofit ideals that OpenAI was originally founded upon.
The injunction names several prominent figures and entities, including OpenAI CEO Sam Altman, President Greg Brockman, LinkedIn co-founder Reid Hoffman, and Microsoft Vice President Dee Templeton. The accusations include:
Blocking competition: Preventing investors from supporting rivals, including Musk’s AI company, xAI.
Misusing sensitive information: Leveraging proprietary data obtained through Microsoft’s partnership with OpenAI.
Governance changes: Shifting OpenAI from its nonprofit roots to a for-profit model and transferring valuable assets.
Self-serving transactions: Engaging in deals that favor individuals with financial ties to OpenAI’s leadership.
Musk’s attorneys argue that these actions are causing irreparable harm and seek a court order to preserve OpenAI’s nonprofit character until the case is resolved.
Musk, a co-founder of OpenAI, left the organization in 2018 due to disagreements over its direction. He claims to have donated over $44 million to support OpenAI’s nonprofit mission and now alleges that the company has abandoned those principles. OpenAI, which started as a nonprofit in 2015, adopted a "capped-profit" model in 2019 and is currently transitioning to a fully for-profit structure. Musk contends this move contradicts the company’s original promise to make AI advancements broadly accessible.
The injunction also highlights alleged anticompetitive practices. Musk’s team claims that OpenAI pressured investors to avoid funding its competitors, including xAI. This is said to have deprived xAI of potential capital. However, despite these challenges, xAI recently secured $5 billion in funding, making it one of the most well-funded AI startups globally.
Additionally, Musk’s attorneys accuse OpenAI and Microsoft of improper resource sharing and favoritism. For example, OpenAI selected Stripe as its payment processor, a platform in which CEO Sam Altman holds substantial financial interests. Hoffman’s dual role on the boards of OpenAI and Microsoft also raised concerns about conflicts of interest.
Musk’s legal team warns that if OpenAI continues its for-profit transition, the company might not have sufficient funds to cover damages should the court rule against it. They also caution that unwinding OpenAI’s financial transactions would become increasingly complex as more investments are accepted. Bloomberg reports that investors in OpenAI’s recent funding round have the right to withdraw their money if the transition to a for-profit model is not completed within two years.
OpenAI has dismissed Musk’s claims as baseless. In a statement, a spokesperson for OpenAI characterized Musk’s fourth legal attempt as unfounded and reiterated the company’s stance that the allegations lack merit.
The case underscores ongoing tensions between Musk and OpenAI as the organization navigates its shift from a nonprofit mission to a for-profit business model.
