Elon Musk’s lawsuit accusing OpenAI of abandoning its nonprofit mission was withdrawn in July and then refiled in August. The amended complaint now includes new defendants, including Microsoft, LinkedIn co-founder Reid Hoffman, and former OpenAI board member and Microsoft VP Dee Templeton.
The revised filing also added new plaintiffs Shivon Zilis, a Neuralink executive and former OpenAI board member, and Musk’s AI company, xAI.
Musk was one of the founders of OpenAI, originally established as a non-profit organization with the purpose of researching and developing AI for the benefit of humanity. He left the company in 2018 due to differences of opinion over the direction of the company.
In the complaint, Musk’s lawyers claim that OpenAI is now “actively seeking to eliminate competitors” like xAI by “extracting promises not to fund them from investors.” He is also said to be unfairly benefiting from Microsoft’s infrastructure and expertise in what Musk’s lawyers described in the filing as a “de facto merger.”
“xAI suffered damage without limit. We have been harmed by our inability to license OpenAI technology under Microsoft’s proprietary licenses, our inability to obtain compute from Microsoft on terms as favorable as OpenAI receives, and the exclusive exchange of competitively sensitive information between OpenAI and Microsoft. “The complaint, filed late Thursday in federal court in Oakland, California, states.
The complaint alleges that Hoffman’s position on the boards of Microsoft and OpenAI while also being a partner at investment firm Greylock gave him a privileged and unlawful view of the two companies’ transactions. (Hoffman stepped down from OpenAI’s board of directors in 2023.) According to the complaint, Greylock invested in Inflection, an AI startup that Microsoft acquired earlier this year and could reasonably be considered an OpenAI competitor, Musk’s lawyers note.
In the case of Templeton, who was briefly appointed by Microsoft as a non-voting board observer for OpenAI, the redacted filing alleges that she was in a position to facilitate an agreement between Microsoft and OpenAI that violated antitrust regulations.
“The purpose of prohibiting interlocking among directors is to prevent the sharing of competitively sensitive information in violation of antitrust laws and to provide a forum for coordinating other anti-competitive activities,” the complaint states. “Allow Templeton and Hoffman to serve as members of OpenAI… The board has undermined this purpose. “
Along with Microsoft, Hoffman and Templeton, California Attorney General Rob Bonta is named as a defendant in Musk’s complaint. Bloomberg reported this month that OpenAI is in talks with Bonta’s office over a process to change its corporate structure.
Zilis, who stepped down from the OpenAI board in 2023 after serving as a member for about four years, is classified as an “injured employee” under California corporate law, according to the amended complaint. Zilis continued to raise concerns about insider trading at OpenAI, but they fell on deaf ears. According to the complaint, they are substantially similar to Musk’s concerns.
In addition to leading Neuralink research, Zilis has close ties to Musk, having served as project director at Tesla from 2017 to 2019. (Neuralink is Musk’s brain-computer interface venture.) She is also the mother of Musk’s three children, Techno Mechanicus and twins Strider and Azure.
The 107-page amended complaint contains the unusual detail that OpenAI CEO Sam Altman proposed selling its own cryptocurrency in January 2018, before ultimately deciding to switch to a profit-limited structure. Musk is believed to have shot down the idea of selling cryptocurrency.
The purpose of the lawsuit is the same for the plaintiff. OpenAI benefited from Musk’s early involvement with the company, but it broke its non-profit promise to make the fruits of AI research available to all. “No amount of clever drafting or excessive creative dealing can mask what’s going on here,” the complaint reads. “OpenAI, Inc., co-founded by Musk as an independent charity committed to safety and transparency, is quickly becoming a fully commercial subsidiary of Microsoft.”
OpenAI sought to dismiss Musk’s lawsuit, calling it “wild” and baseless.
