Elon Musk Sues OpenAI: Alleges Breach of Non-profit Agreement

Key Takeaways

• Elon Musk has filed a lawsuit against OpenAI and its CEO Sam Altman.
• The complaint alleges that Altman has reneged on an agreement to run OpenAI as a non-profit organization.
• According to Musk’s suit, OpenAI now operates as a “de facto subsidiary” of Microsoft

Since Elon Musk left OpenAI in 2018, his relationship with the company and its CEO Sam Altman has gone from bad to worse. 

In public remarks, Musk has made it clear that he disapproves of the direction OpenAI has gone in since his departure, most notably, its move away from the non-profit model upon which it was founded. Up until recently, the Tesla founder’s interventions were mostly limited to rants on X. But now, Musk has taken his beef with OpenAI’s current leadership to the court.

Sam Altman and Gregory Brockman Accused of Reneging on OpenAI Founding Agreement

In a complaint  filed on Thursday, February 29, Musk accused Altman and fellow OpenAI cofounder Gregory Brockman of breaching the terms of an agreement they all entered into when OpenAI was initially formed in 2015.

Back then, Musk provided a significant portion of the initial investment in the project, which was founded as a non-profit research organization to develop responsible AI systems. 

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But after OpenAI incorporated a profit-making company in 2019, Musk has moved to sue Altman and Brockman for breach of contract.

Referring to its relationship with Microsoft, the complaint alleges that OpenAI’s founding agreement has been “turned on its head.” 

Contradicting its original, non-profit open-source principles, the new OpenAI has been “transformed into a closed-source de facto subsidiary of the largest technology company in the world,” the suit claims.

GPT-4, the Not so Open AI

According to Musk’s lawsuit, under OpenAI’s founding agreement, Altman and Brockman were to develop AI “for the benefit of humanity rather than for any for-profit company or personal profit.”

However, with the GPT-4 language model, the suit claims the defendants “radically departed from their mission in breach of the Founding Agreement.”

Observing that “GPT-4 is an entirely closed model,” the complaint alleges it is “the opposite of ‘open AI.’” Against the spirit within which the venture was initially founded, it adds: 

“Microsoft stands to make a fortune selling GPT-4 to the public, which would not be possible if OpenAI—as it is required to do—makes the technology freely available to the public.”

Altman’s Mounting Legal Problems

Alongside Musk’s lawsuit, Sam Altman also faces an investigation by the Securities and Exchange Commission (SEC) over the potential deception of OpenAI investors.

Recalling the events of November, when Altman was temporarily ousted from OpenAI over his alleged failure to be fully transparent with the board, the SEC probe is reportedly scrutinizing the CEO’s internal communications.

About the Author

James Morales

Although his background is in crypto and FinTech news, these days, James likes to roam across CCN’s editorial breadth, focusing mostly on digital technology. Having always been fascinated by the latest innovations, he uses his platform as a journalist to explore how new technologies work, why they matter and how they might shape our future.

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