Elon Musk vs OpenAI: Unraveling the Legal Battle Over AGI

The richest man in the world, Elon Musk, and OpenAI, the company behind the popular chatbot ChatGPT, have entered into a legal tussle. 

With this legal dispute, the start-up’s internal conflicts have been brought into the spotlight. This comes after late last year when OpenAI saw the sudden sacking and then the subsequent reinstatement of its chief executive officer, Sam Altman. This fueled speculation about internal tensions within the company, which has initiated an internal investigation.

Led by the law firm WilmerHale, the investigation is to probe the conditions around the firing and return of the CEO as well as provide insights into the challenges it is facing as OpenAI transitions from a non-profit to a for-profit business.

Now, Musk, who’s currently involved with several companies, including SpaceX, Tesla, X (previously Twitter), The Boring Company, Neuralink, and xAI, has filed a lawsuit against OpenAI, its CEO Altman, and President Greg Brockman.

Last week, the tech mogul accused the company of breaking the agreement established when Musk was involved in the company nearly a decade ago, in 2015. In its documents, which were filed in a San Francisco court, Musk claims that the firm was always intended as a non-profit entity.

According to the 52-year-old, the organization is not following its original non-profit mission. OpenAI, as per him, is now prioritizing profit instead of focusing on the advancement of humanity through AI.

Musk is the co-founder of OpenAI, which is an artificial intelligence research and deployment company that aims to ensure that general-purpose AI benefits all of humanity. Back in 2018, he stepped down from OpenAI’s board and is no longer involved with the company.

The CEO of Tesla and the owner of X and SpaceX has cited his role at the automobile company as “a potential future conflict (of interest)” as the electric vehicle manufacturer was also developing AI for its self-driving cars.

Since leaving OpenAI, the firm has gained public recognition with the launch of ChatGPT in November 2022 and then Musk founded his own AI start-up called xAI in July 2023. In recent years, OpenAI has also received a massive $13 bln in investment from tech giant Microsoft.

Ever since Musk left the organization six years ago, he has actually been one of OpenAI’s most vocal critics. Lawyers representing Musk now claim that the Microsoft-backed company’s pursuit of financial gains contradicts the initial agreement and violates the core principles upon which it was built.

Then, in a tweet this week, the eccentric entrepreneur announced on his social media platform that he would drop the lawsuit if OpenAI changes its name to ‘ClosedAI’ in order to align its name with its motive. Musk said while noting that the start-up needs to be truthful about its goals:

“Change your name to ClosedAI, and I will drop the lawsuit.”

He also changed a picture of the CEO Altman wearing an ID card, swapping the information on the card to say “ClosedAI” instead of OpenAI.

Legal experts, meanwhile, have been doubting the viability of Musk’s claims of breach of contract. Many questions have also been raised regarding the lawsuit’s potential success in court, arguing that Musk’s claims might not hold up.

The Elon Musk vs OpenAI Lawsuit

Before the legal dispute, Musk took several shots at OpenAI. In Feb. last year, he claimed that the start-up was “controlled by Microsoft,” and then a month later, he posted:

“I’m still confused as to how a non-profit to which I donated ~$100M somehow became a $30B market cap for-profit.”

Last Thursday, Musk took legal action against OpenAI, a leader in the AI market. The lawsuit in question opens with the warning that artificial general intelligence (AGI) poses “a grave threat to humanity.”

According to the suit, Altman claimed to share Musk’s concerns over AGI. And together with Brockman, they all agreed to form a non-profit lab, known as OpenAI today, that’ll be “the opposite of Google.” Moreover, it will be open source and follow the principles as enclosed in the agreement, it said.

But while Musk sees AGI as an “existential threat,” others see it as a “source of profit and power,” stated the lawsuit, adding that in the hands of Google, it particularly poses an “acute and noxious danger to humanity.”

The lawsuit further claims Musk to be a “moving force” behind the creation of OpenAI and that he supplied a majority of its funding in its early years. 

However, today, Microsoft is OpenAI’s biggest investor, having poured in multi-billion dollars. A year later, after Musk left, Microsoft made a $1 billion investment in OpenAI after finalizing a multi-year partnership and another $10 billion investment in 2023. A significant portion of the investment, however, was in computational resources on its Azure cloud service.

In his lawsuit, Musk claims that the company is refining AGI to maximize profit instead of the benefit of humankind. “OpenAI Inc has been transformed into a closed-source, de facto subsidiary of… Microsoft” alleges the lawsuit filed in California Superior Court in San Francisco.

The founding board member of the company has also been arguing that Altman and Brockman have “set aflame” its founding agreement by releasing the latest in its series of LLM, GPT-4. It was made publicly available via the paid chatbot product ChatGPT Plus, OpenAI’s API, and the free chatbot Microsoft Copilot. 

The design for this fourth iteration was kept secret which was “primarily driven by commercial considerations, not safety,” stated the lawsuit, which it adds is a breach of contract, fiduciary duty, and unfair business practices.

Moreover, OpenAI’s investment deal with Microsoft makes its AGI technology effectively owned by the tech giant, which the lawsuit alleges to be outside the scope of the company’s licensing agreement with OpenAI. Authorities in the UK, the US, and the EU are already scrutinizing OpenAI’s deal with Microsoft.

Musk’s lawsuit against the startup further points out the events of Nov. 2023 when Altman was fired as the organization’s CEO, only to be reinstated soon after. This, the lawsuit, indicates Microsoft’s ‘significant leverage’ over OpenAI. Moreover, it points out that the board formed thereafter lacks the necessary expertise to assess whether the organization has achieved AGI. As a result, it’s unclear whether OpenAI has created a product outside the scope of Microsoft’s license.

The lawsuit then goes on to claim that OpenAI is developing a model known as Q* that has an even stronger claim to be AGI.

According to the lawsuit, Musk now compels OpenAI to follow its founding agreement and return to its mission to develop AGI not for the benefit of individual defendants and the largest tech company in the world but for the benefit of humanity.

Click here for the five best ChatGPT extensions.

Elon Musk vs OpenAI – The Response

In reciprocation to Musk’s lawsuit, OpenAI released a blog featuring a set of private emails between the company, the team, and him between 2015-2018.

The response came on Tuesday, March 5, in which the Silicon Valley start-up and its co-founders Altman, Brockman, Ilya Sutskever, John Schulman, and Wojciech Zaremba expressed their disappointment in Musk, who they said, inspired them to “aim higher” only to then tell them that they “would fail,” then started a competitor, and has now sued them when together they have “started making meaningful progress towards OpenAI’s mission without him.”

They further denied Musk’s accusations of “betrayal” of its original mission and said they will be pushing to have all of Musk’s claims dismissed in court.

Hitting back at Musk’s claims that OpenAI has given up on its original mission, his old emails to the company reveal that he was actually in support of making OpenAI for-profit and even suggested merging the company with Tesla.

According to OpenAI, Musk pushed the start-up to be more aggressive with fundraising. While initial plans were to raise $100 million, Musk wanted a $1 billion funding round for the start-up in 2015. The non-profit then raised less than $45 million from the tech billionaire, as per the blog post. 

While detailing their counter-arguments, all the executives from the organization noted that a year before Musk’s departure from the firm in 2017, they came to the realization that they were going to require much more capital to succeed at their mission — about billions of dollars annually.

This amount, the blog noted, was considerably more than any of the team members, “especially Elon, thought we’d be able to raise as the non-profit.”

Next year, in 2018, Musk proposed that the AI start-up should be attached to “Tesla as its cash cow” and that it was the “only path” for the company to even hope to have any competition with Google, which has DeepMind, Google Brain, Research, Cloud, TensorFlow, TPUs, and more.

It was also possible Musk “wanted full control,” noted the post, adding that they couldn’t come to an agreement with him regarding the terms as the team felt it was against OpenAI’s aim “for any individual to have absolute control.”

Then, on failure to reach a consensus, the tech billionaire “soon chose to leave OpenAI,” commenting that the company’s likelihood to be successful was zero and that he’ll build an AGI competitor within Tesla.

When Musk quit the company in early 2018, a blog post from OpenAI stated that he told the team that “he was supportive of us finding our own path to raising billions of dollars.”

When it comes to the open source issue, the post noted that Musk understood their mission did not imply open-sourcing AGI. In response to one of the co-founders, Sutskever, talking about the company needing to be less open about and not share its science as they get closer to building AI because what’s important is that everyone benefits from its fruits, Musk said, “Yup” in agreement. 

In a post on X, one of OpenAI’s co-founders, Zaremba, wrote that he admired both tech leaders and that it is sad to see them fighting unnecessarily, adding that it would be “much better” if all this creative energy is put into building the future that both Musk and Altman dream of.

Meanwhile, Altman shared an old conversation in which he backed Musk when many were against Tesla in 2019.

Building Responsibly

Earlier this week, after Musk’s lawsuit, OpenAI, along with 284 other companies, including Google, Microsoft, Meta, Salesforce, Y Combinator, Salesforce, Hugging Face, Scale AI, Databricks, ElevenLabs, Khosla Ventures, Stability AI, and Mistral AI, signed an open letter calling for responsible AI.

This was yet another letter written by venture capitalist Ron Conway and his firm SV Angel, widely signed by some of the biggest companies in the world. In it, they pledged to build AI for people to flourish ‘much more than we could before.’ 

The letter calls for maximizing AI’s benefits and mitigating its risks as those who signed it expect the technology’s “impact to be more akin to the printing press, the combustion engine, electricity and the internet.”

“AI is for all of us, and all of us have a role to play in building AI to improve people’s lives,” concluded the letter. “We, the undersigned, already are experiencing the benefits from AI and are committed to building AI that will contribute to a better future for humanity.”

In a post on X, OpenAI CEO Altman meanwhile said that he was “excited for the spirit of this letter,” adding that advancement in AI “will be one of the biggest factors in improving people’s quality of life.” Altman had signed another letter in May which warned that AI could lead to humanity’s extinction.

His company, OpenAI, and his colleagues, in their blog post, have also noted that the start-up is advancing its mission by making its technology broadly usable to empower people and improve their daily lives. They noted that not only do they “provide broad access to today’s most powerful AI,” but they also offer a free version to hundreds of millions of people. It further gave examples of Albania, Kenya, India, Iceland, and Rhode Island using OpenAI’s tools to bring big changes into their resident’s lives. 

Now to conclude, the hearing for the lawsuit is yet to take place. However, the legal battle, in itself, can have implications for the border AI industry as ethical and legal debates surrounding AI continue though it’s too soon to know its full effects yet.

Click here for the comparison between ChatGPT, Grok, and Gemini.