Elon Musk Sues to Stop OpenAI’s For-Profit Transformation
Elon Musk has reportedly taken legal action to halt OpenAI’s transformation to a for-profit company.
The billionaire and his artificial intelligence (AI) startup xAI have filed for a preliminary injunction in federal court to halt the conversion, CNBC reported Saturday (Nov. 30). The injunction would also prevent OpenAI from blocking its investors from funding its rivals, a group that includes Musk’s company.
Attorneys for Musk argue in their filing that OpenAI should be blocked from “benefitting from wrongfully obtained competitively sensitive information or coordination via the Microsoft-OpenAI board interlocks.”
As the report noted, this new filing is the latest battle in a legal war between OpenAI and Musk, who was involved in the company’s early days. OpenAI was founded in 2015 as a nonprofit AI research organization, and four years later added a for-profit entity called OpenAI LP as a subsidiary of the nonprofit unit.
In February, Musk filed a complaint alleging that OpenAI and CEO Sam Altman violated the company’s founding principles by emphasizing profits over benefiting humanity, and by establishing close ties to Microsoft.
Musk withdrew that suit in June but refiled it two months later, adding claims of unfair business practices and allegations that, as someone involved in the launch of OpenAI, he was manipulated into believing the company would be a nonprofit.
And last month, Musk added antitrust claims against OpenAI and Microsoft to the suit, claiming the two companies colluded to remove competition in AI.
Musk accused Altman of “rampant self-dealing” between OpenAI and other companies, and alleged that Altman pushed the company into a “de facto merger” with Microsoft.
OpenAI has dismissed that claim and the ones in the more recent filing.
“Elon’s fourth attempt, which again recycles the same baseless complaints, continues to be utterly without merit,” an OpenAI spokesperson told CNBC.
Last month also saw reports that xAI had raised $5 billion in a funding round, valuing the company at $50 billion, and bringing its total funding for the year to $11 billion.
The funding round also more than doubled xAI’s valuation, which was gauged at $24 billion when the company raised $6 billion in the spring, according to a report by The Wall Street Journal. xAI plans to use the new financing to add another 100,000 Nvidia chips for training its AI models, the report said.
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