Lawyers for technology billionaire Elon Musk have filed a preliminary injunction against OpenAI, several of its founders, and investor and close partner, Microsoft, to defend OpenAI and other named defendants from what Musk’s counsel called anti-competitive behavior.
The petition, filed in the US District Court for the Northern District of California, accuses OpenAI, its CEO Sam Altman, President Greg Brockman, Microsoft, LinkedIn co-founder and former member of the board of OpenAI Reid Hoffman, and former member of the board of OpenAI and Microsoft VP Dee Templeton of various activities – an illegal variety and seeks to stop it. Charges include:
Discourage investors from supporting OpenAI competitors like Musk’s own AI company, xAI.
Benefiting from “misdiscovered competitive intelligence” through OpenAI’s collaboration with Microsoft.
Converting OpenAI’s management structure to for-profit and “transferring any resources, including intellectual property, owned, or controlled by OpenAI, Inc., its subsidiaries, or affiliates.”
To cause OpenAI to do business with entities in which any defendant has a “financial interest.”
Musk’s lawyers say “irreparable harm” will occur if the injunction is not granted.
“Plaintiffs and the public want a pause,” they wrote in the filing. “The obligation to protect what remains of OpenAI’s useless nature, free from self-discipline, is the only appropriate solution. If not, OpenAI assured Musk and the public will be long gone by the time the court comes to merit.”
Musk’s lawsuit against OpenAI, which accuses the company of abandoning its original nonprofit mission to make the fruits of AI research available to all, was dismissed in July, only to be revived later this summer. In an amended complaint in November, the court named new defendants including Microsoft, Hoffman, and Templeton, and two new plaintiffs: Shivon Zilis, a Neuralink exec and former OpenAI board member, and xAI.
Musk has argued in previous suits that he was defrauded of more than $44 million he says he donated to OpenAI by misrepresenting his “known concerns about the potential harms” of AI. Musk, one of OpenAI’s co-founders, left the company in 2018 over disagreements over its leadership.
Musk created xAI last year. Recently, the company released Grok, a flagship AI model that now provides several features on Musk’s social network, X (formerly known as Twitter). xAI also provides an API that allows customers to build Grok into third-party apps, platforms, and services.
In the lawsuit, Musk’s lawyers say that OpenAI is depriving xAI of money by taking promises from investors not to pay it and competing. In October, the Financial Times reported that OpenAI required investors in its latest fund to refrain from funding any of OpenAI’s competitors, including xAI.
“Musk confirmed that a potential major investor in OpenAI’s October funding round declined to invest in xAI,” Musk’s lawyer wrote.
Of course, xAI has had no trouble raising money recently. Reportedly, the startup closed $5 billion this month with participation from prominent investors including Andreessen Horowitz and Fidelity. With $11 billion in the bank, xAI is one of the most well-funded AI startups in the world.
Musk’s proposed injunction also claims that Microsoft and OpenAI continue to illegally share information and resources, and that several of the defendants, including Altman, are engaging in conduct that harms market competition. For example, the article notes, OpenAI has chosen Stripe, a payment platform in which Altman has “financial interests,” as OpenAI’s payment processor. (Altman reportedly made billions from Stripe holdings.)
Microsoft, which started supporting OpenAI in early 2019, raised the partnership over the past several years, investing ~$13 billion in the exchange which actually makes up 49% of the company’s earnings. Microsoft has also allowed OpenAI to make the most of cloud resources, making it possible to start training, fine-tuning, and running AI models like the powerful ChatGPT.
Hoffman’s position on the boards of Microsoft and OpenAI as well as a partner at investment firm Greylock gave Hoffman a privileged view into the company’s dealings, Musk’s lawyers argue. (Hoffman stepped down from OpenAI’s board in 2023.) As for Templeton, whom Microsoft temporarily appointed as an observer to OpenAI’s board, Musk’s attorney argues that he was in a position to facilitate agreements between Microsoft and OpenAI that would violate antitrust laws.
“Maintaining OpenAI’s charitable status pending final resolution and halting further self-dealing by Altman will protect both the organization’s primary mission and the public interest in fair donor management,” Musk’s lawyers wrote.
Musk’s attorney wrote that if the injunction is not granted, OpenAI may not have “sufficient funds” to pay the damages that the court would rule in Musk’s favor. (OpenAI is said to be spending more than 5 billion dollars and is not close to breaking even.) Moreover, they say, were the judge to reject the change of OpenAI unprofitable, it would be “impossible” to “free” the business of the company without “spreading investor losses” should OpenAI continue to receive new funds.
“No observer can look at OpenAI today and say it has anything like what it promised,” Musk’s lawyers wrote. “The defendants respectfully request that the court preserve the status quo and suspend the defendants’ conduct until the final stage.”
In a statement, an OpenAI spokesperson said, “Elon’s fourth attempt, which repeats the same claims, remains unfounded.” The company previously sought to dismiss Musk’s suit, calling it “blusterous” and baseless.
