Elon Musk files a lawsuit against OpenAI and Microsoft, alleging anti-competitive practices and conflicts of interest in the AI industry.
Elon Musk has initiated legal action against OpenAI and its key partners, including Microsoft, alleging anti-competitive behavior.
The class-action lawsuit, filed Friday evening in the U.S. District Court for the Northern District of California, targets OpenAI CEO Sam Altman, President Greg Brockman, Microsoft, and others associated with the companies.
Allegations of Market Manipulation
Musk’s legal team claims OpenAI has abandoned its original nonprofit mission, instead adopting strategies that harm competition in the AI industry.
Specifically, the lawsuit alleges that OpenAI and Microsoft engaged in market manipulation to discourage investments in competing ventures like Musk’s xAI.
According to Musk’s attorneys, OpenAI’s latest funding round included coercive measures to prevent investors from supporting rival AI initiatives. They argue this action poses challenges to startups like xAI, which recently secured funding.
The lawsuit further seeks to stop OpenAI and Microsoft from engaging in practices detrimental to competition, such as sharing proprietary information and technology. Musk’s lawyers contend:
“OpenAI has shifted its governance model to a for-profit structure, violating its initial commitment to advancing AI technologies for the public good.”
Microsoft’s Financial Ties to OpenAI
Microsoft’s extensive financial backing of OpenAI is a central focus of the case. Since 2019, Microsoft has invested over $13 billion in OpenAI, gaining substantial influence over its operations and revenues.
The complaint accuses Microsoft of using its partnership to access OpenAI’s proprietary AI models and assets hosted on Microsoft’s cloud services.
The filing also raises concerns about potential conflicts of interest, citing OpenAI Chairman Sam Altman’s financial ties to Stripe, which manages OpenAI’s payment system.
Musk’s team claims this relationship could undermine market fairness, calling it part of a broader scheme of self-enrichment damaging to the AI ecosystem.
xAI’s Progress Amid Allegations
Despite the allegations, xAI has achieved notable milestones, including a $5 billion funding round with backing from Andreessen Horowitz and Fidelity.
While Musk’s legal team argues that OpenAI’s practices discouraged some investors, xAI’s recent fundraising success demonstrates its ability to attract capital.
Founded last year, xAI has developed a generative AI model named Grok, which integrates with Musk’s social network X (formerly Twitter).
However, Musk’s lawyers claim OpenAI’s alleged anti-competitive behavior threatens xAI’s long-term potential.
OpenAI’s Recent Moves Add Complexity
Meanwhile, OpenAI recently announced a $1.5 billion tender offer allowing employees to sell shares to SoftBank, which now holds a significant stake in the company.
Musk’s legal team contends this move further distances OpenAI from its original nonprofit mission, prioritizing financial gains instead.
The case highlights a growing debate over fairness and competition in the rapidly evolving AI industry, with potentially far-reaching implications for the sector.