Lawyers for tech billionaire Elon Musk have filed a lawsuit against OpenAI, several of its co-founders, and its investor and close collaborator Microsoft for what Musk's lawyers claim is an anti-competitive move. It filed for a preliminary injunction to prevent OpenAI and other named defendants from participating in the conduct.
The injunction petition, filed late Friday in the U.S. District Court for the Northern District of California, is filed by OpenAI, CEO Sam Altman, President Greg Brockman, Microsoft, and LinkedIn co-founder and former OpenAI board member Reed. He is accusing Mr. Hoffman. Former OpenAI board member and Microsoft vice president Dee Templeton has committed a variety of illegal activities and is seeking to stop them. The allegations include:
Discouraging investors from backing OpenAI rivals like Musk's own AI company xAI. Through OpenAI's ties to Microsoft, it profits from “illicitly obtained competitively sensitive information.” Convert OpenAI's governance structure to a for-profit entity and “transfer any material assets, including intellectual property, owned, held, or controlled by OpenAI, Inc., its subsidiaries, or affiliates.” causing OpenAI to do business with an organization in which the defendant has a “significant financial interest”;
Musk's lawyers argue that “irreparable harm” will occur if the injunction is not granted.
“Plaintiffs and the public need to pause,” they wrote in their filing. “An injunction to free and preserve what remains of OpenAI's non-commercial character from self-dealing is the only appropriate remedy. Otherwise, OpenAI, as promised to Mr. Musk and the public, By the time the case comes before the courts, it will be long gone.”
Musk's lawsuit against OpenAI, which fundamentally accuses the company of abandoning its original nonprofit mission, was dropped in July, but was refiled later this summer. In an amended complaint in November, the lawsuit named new defendants including Microsoft, Hoffman, and Templeton, and two new plaintiffs: Neuralink executive and former OpenAI director Shivon Zilis and xAI.
In previous lawsuits, Musk claimed that he was defrauded out of more than $44 million he allegedly donated to OpenAI by preying on “well-known concerns about existential harm” from AI. Musk, one of OpenAI's co-founders, left the company in 2018 over disagreements over its direction.
Musk's lawyers argued in their motion for an injunction that OpenAI was depriving xAI of capital by extracting promises from investors not to fund competition with xAI. In October, the Financial Times reported that OpenAI asked investors in its latest funding round to also refrain from funding OpenAI's rivals, including xAI.
“Mr. Musk has confirmed that at least one major investor in OpenAI's October funding round has since declined to invest in xAI,” Musk's lawyers wrote.
Of course, xAI hasn't had any trouble raising funding lately. The startup reportedly closed a $5 billion round this month with participation from high-profile investors including Andreessen Horowitz and Fidelity. xAI has about $11 billion in the bank, making it one of the most well-funded AI companies in the world.
Musk's injunction motion also alleges that Microsoft and OpenAI continue to illegally share confidential information and resources and that several of the defendants, including Altman, engage in self-dealing that undermines competition in the market. There is. For example, in the filing, OpenAI says it selected Stripe, a payment platform in which Altman has a “significant financial interest,” as OpenAI's payment processor. (Altman is said to have made billions of dollars from his Stripe holdings.)
Microsoft, which first invested in OpenAI in 2019, strengthened its partnership last year, investing $13 billion in exchange for an effective 49% stake in OpenAI's revenue. OpenAI also makes extensive use of Microsoft's cloud hardware resources to train, fine-tune, and run AI models like those that power ChatGPT.
Musk's lawyers say Hoffman's positions on the boards of Microsoft and OpenAI, as well as his partner in the investment firm Greylock, gave him a privileged position in dealing with both companies. His lawyer argues. (Hoffman resigned from OpenAI's board of directors in 2023.) As for Templeton, who Microsoft temporarily appointed as a non-voting board observer for OpenAI, Musk's lawyers say she has The lawsuit alleges that the company was in a position to facilitate an agreement that violated antitrust laws.
“Upholding OpenAI's charitable status and halting further self-dealing by Altman until a final resolution is reached protects both the organization's founding mission and the public interest in the proper operation of a charity.” ” Musk's lawyers wrote.
Musk's lawyers said that if the injunction is not granted, OpenAI may “lack sufficient funds” to pay damages if the court ultimately rules in Musk's favor. I wrote it. (OpenAI is reportedly spending more than $5 billion and is far from breaking even.) Furthermore, even if a judge does not allow OpenAI to go nonprofit, it would be “virtually impossible” to do so. , they say it will be “virtually impossible” to “un-trade” OpenAI. If OpenAI continues to accept new investments, it could incur extensive investor losses.
“No objective observer today can look at OpenAI and say it bears no resemblance to what was promised,” Musk's lawyers wrote. “Plaintiffs respectfully ask the court to maintain the status quo and suspend defendants' aggravating conduct pending final disposition.”
OpenAI did not immediately respond to TechCrunch's request for comment. The company is seeking to dismiss Musk's lawsuit, calling it “exaggerated” and baseless.