Elon Musk OpenAI lawsuit: ETtech Explainer: why Elon Musk is taking OpenAI to court again

Elon Musk, cofounder of OpenAI, is back in court, challenging the AI company he helped create. Musk has filed for a preliminary injunction against OpenAI, its cofounder Sam Altman, and its key investor Microsoft. The case, filed in a US court in California, accuses OpenAI and others of unfair business practices and seeks to stop what Musk sees as harmful activities.

What is Musk claiming?

Musk’s legal team has made several accusations:

• Blocking competition: Musk says OpenAI discourages investors from supporting rival AI companies like his own startup, xAI. Reports suggest OpenAI asked investors in its latest funding round to avoid backing competitors.
• Governance concerns: Musk opposes OpenAI’s move from a nonprofit to a profit-driven company, arguing it benefits insiders unfairly.
• Conflicts of interest: The lawsuit highlights deals with companies linked to OpenAI leaders, like the use of Stripe (where CEO Sam Altman reportedly has financial stakes) as a payment platform.
• Microsoft’s role: Musk claims Microsoft, a major investor, has used its position to gain access to sensitive information, giving it an unfair edge.

Why Musk wants action now

Musk argues that OpenAI’s shift to a for-profit model is straying from its original mission to advance AI for everyone’s benefit. He says OpenAI’s actions harm competition and risk long-term damage to the AI industry.Musk’s legal team also warns that if OpenAI completes its transition to a for-profit public benefit corporation, reversing the changes later would hurt investors and make it hard to restore its nonprofit roots.

What’s at stake?OpenAI, best known for its AI tools like ChatGPT, has become a leader in the fast-growing AI industry. Backed by $13 billion from Microsoft, OpenAI has access to powerful cloud resources to develop its models.

Musk’s xAI, though well-funded with $11 billion, faces challenges in competing with OpenAI. He claims OpenAI’s restrictions on investors limit xAI’s opportunities in this billion-dollar market.

OpenAI’s responseIn an emailed statement to TechCrunch, OpenAI responded to Musk’s latest lawsuit, saying, “Elon’s fourth attempt, which again recycles the same baseless complaints, continues to be utterly without merit.” The company had previously sought to dismiss Musk’s suit, calling it “blusterous” and baseless.

This legal battle highlights growing tensions in the AI industry and raises questions about how companies balance profit and fairness in a rapidly evolving space.