Key Takeaways
On Tuesday, Jan. 14, an Oakland court will stage the opening scene in a high-stakes legal drama that pits Elon Musk against OpenAI and its founders.
Ahead of Tuesday’s hearing, Musk’s lawsuit has received support from a key think tank and industry figures, including the “Godfather of AI” Geoffrey Hinton.
Meanwhile, the Federal Trade Commission and Department of Justice have provided legal analysis that could buttress one of its central arguments.
Initially filed in August 2024, Musk’s lawsuit seeks to prevent OpenAI from restructuring as a for-profit company.
For Musk, the issue is personal. Having co-founded OpenAI with Altman and Greg Brokman in 2015, he provided the lion’s share of the organization’s initial funding but left in 2018 citing potential conflicts of interest.
Musk’s complaint centers on OpenAI’s transformation since then, including its partnership with Microsoft and the transition to a for-profit company.
These changes, the lawsuit argues, violate agreements Altman and Brokman allegedly entered into when they started the venture.
Considering the commercial interests at stake and Musk and Altman’s escalating rivalry, personal grievances may well motivate the litigation. But briefs submitted to the court in recent weeks highlight more widespread concerns with OpenAI’s business practices.
An Amicus Brief composed by the campaign group Encode argues that OpenAI’s for-profit restructuring would undermine its commitment to public safety, which it said risked becoming secondary to the commercial interests of shareholders.
Encode’s brief mirrors a key pillar of Musk’s argument—that OpenAI gained an important advantage from its non-profit status—one that could be considered unfair if it now becomes a normal commercial enterprise.
Adding gravitas, the filing was accompanied by comments from Geoffrey Hinton, who is responsible for some of the most important innovations in the history of machine learning.
“OpenAI was founded as an explicitly safety-focused non-profit and made a variety of safety-related promises in its charter,” Hinton observed .
“It received numerous tax and other benefits from its non-profit status. Allowing it to tear all of that up when it becomes inconvenient sends a very bad message to other actors in the ecosystem,” Hinton added.
In addition to Encode’s Amicus Brief, the FTC and the DOJ have also provided input ahead of the opening hearing in Musk vs. OpenAI.
The regulators’ analysis, which Reuters reported on Friday, Jan. 10, pointed out legal doctrines that support Musk’s claim that OpenAI and Microsoft engaged in anticompetitive practices.
Musk’s lawyer Marc Toberoff said the participation of the FTC and DOJ “is a sign of how seriously regulators take OpenAI and Microsoft’s misconduct.”
OpenAI’s partnership with Microsoft is currently being scrutinized by a wide-ranging FTC antitrust probe that is looking into the Big Tech firm’s licensing and investment practices.
In Musk’s lawsuit, unfair competition is listed as one of five charges levied against OpenAI, but the deal with Microsoft forms just one part of the allegation.
“From an investment perspective, competing against an entity employing the new OpenAI business model would be like playing a game of basketball where the other team’s baskets are worth twice as many points,” the filing states.
“If this Court validates OpenAI’s conduct here, any start-up seeking to remain competitive in Silicon Valley would essentially be required to follow this OpenAI playbook, which would become standard operating procedure for start-ups to the detriment of legitimate non-profits.”