On Friday, OpenAI responded to billionaire Elon Musk’s ongoing lawsuit by publishing a series of emails and text messages that it claims demonstrate the misleading nature of Musk’s allegations.
Musk’s legal battle with OpenAI, which has been unfolding over several months, centers on accusations that OpenAI has strayed from its original nonprofit mission to make its AI research widely accessible. The conflict intensified last month when Musk’s legal team sought an injunction to stop OpenAI’s transition from a nonprofit to a for-profit corporation.
OpenAI has dismissed Musk’s complaints as unfounded and motivated by personal grievances. According to the released communications, Musk had suggested as early as 2015 that OpenAI could have both nonprofit and for-profit components. Although OpenAI initially launched as a nonprofit, it later encountered financial difficulties.
The published exchanges reveal that on June 13, 2017, Musk proposed that OpenAI merge with a hardware startup, possibly the chip company Cerebras. Several OpenAI leaders agreed with this idea, and the organization began exploring a path towards what President Greg Brockman described as an “AI research + hardware for-profit” model.
OpenAI claims that Musk demanded a majority equity stake, between 50% and 60%, and outlined an organizational structure where he would have unequivocal control and be installed as CEO. Musk even went as far as creating a public benefit corporation named “Open Artificial Intelligence Technologies, Inc,” registered in Delaware. However, OpenAI’s leadership ultimately rejected Musk’s terms.
Musk then suggested that OpenAI be integrated into Tesla, his electric vehicle company, with a $1 billion budget that would “increase exponentially.” This proposal was also rejected by OpenAI’s leadership. In 2018, Musk resigned from OpenAI and largely severed ties with its executive team. OpenAI claims it has offered Musk equity in its for-profit wing on multiple occasions, but Musk has consistently declined.
In a statement, OpenAI said;
You can’t sue your way to [artificial general intelligence]. We have great respect for Elon’s accomplishments and gratitude for his early contributions to OpenAI, but he should be competing in the marketplace rather than the courtroom.
Musk founded his own AI company, xAI, last year. Shortly thereafter, xAI released Grok, an AI model that now powers various features on Musk’s social network, X (formerly known as Twitter). xAI also offers an API that allows customers to integrate Grok into third-party applications, platforms, and services.
In a complaint filed late last month, Musk’s attorneys allege that OpenAI is depriving xAI of capital by securing commitments from investors not to fund xAI or its competitors. In October, the Financial Times reported that OpenAI required investors in its latest funding round to abstain from funding any of OpenAI’s rivals, including xAI.
Despite these allegations, xAI has successfully raised significant funds recently. Last month, the company closed a $6 billion funding round with participation from prominent investors such as Andreessen Horowitz and Fidelity. With approximately $12 billion in the bank, xAI is one of the best-funded AI companies globally.
Musk’s motion for an injunction also claims that OpenAI and Microsoft, its close collaborator and investor, are illegally sharing proprietary information and resources. Google has reportedly called for investigations into Microsoft’s relationship with OpenAI, particularly concerning their cloud computing arrangements.
OpenAI is under pressure to complete its transition to a for-profit entity swiftly. According to Bloomberg, investors in its latest funding round will have the right to reclaim their investments if OpenAI does not convert from a nonprofit within two years.
