Elon Musk has asked a federal court to stop OpenAI from turning into a fully for-profit business.
Lawyers representing Musk, his AI startup xAI, and former OpenAI board member Sivon Zilis filed a motion for a preliminary injunction against OpenAI on Friday. The injunction will also stop OpenAI from asking investors not to fund competitors, including xAI.
Recent court filings include Musk, OpenAI, CEO Sam Altman, technology investor Reid Hoffman; microsoft.
Musk originally sued OpenAI in San Francisco state court in March 2024, then withdrew the complaint and refiled it in federal court a few months later. Musk’s lawyers in the federal lawsuit, led by Marc Toberoff of Los Angeles, alleged in their complaint that OpenAI violated federal racketeering laws, or RICO.
In mid-November, they expanded their complaint to include claims that Microsoft and OpenAI violated antitrust laws when the creator of the chat GPT asked investors to agree not to invest in competing companies, including Musk’s latest startup, xAI.
Microsoft declined to comment.
In their motion for a preliminary injunction, Musk’s lawyers argue that OpenAI should be prohibited from “profiting by wrongfully obtaining competitively sensitive information or coordination through the Microsoft-OpenAI board interlock.”
“Elon’s fourth attempt to recycle the same baseless complaints is completely without merit,” an OpenAI spokesperson said in a statement.
OpenAI has emerged as one of the biggest startups in recent years, and ChatGPT has become a major hit that has helped fuel the company’s massive enthusiasm for AI and related large-scale language models.
Since Musk announced the debut of xAI in July 2023, his new AI business has launched the Grok chatbot and is raising up to $6 billion at a $50 billion valuation, in part to buy 100,000 units. nvidia This is the chip that CNBC reported on earlier this month.
“Microsoft and OpenAI are now seeking to consolidate this dominance by blocking competitors’ access to investment capital (boycotting the group) while continuing to profit from the competitively sensitive information shared over the years during the formation of generative AI,” the lawyers wrote. “We are trying,” the lawyers wrote. filing.
The lawyers wrote that the terms OpenAI asked investors to agree to amounted to a “group boycott” that would “block xAI’s access to essential investment capital.”
The lawyers later added that OpenAI “cannot be marketed as a Frankenstein, serving Microsoft’s financial interests in any corporate form.”
Last July, Microsoft gave up its observer position on OpenAI’s board, but CNBC reported that the Federal Trade Commission will continue to monitor both companies’ influence on the AI industry.
FTC Chairman Linda Khan announced at the beginning of the year that the federal agency would begin “a market survey of investments and partnerships being formed between AI developers and major cloud service providers.” Some of the companies the FTC cited as part of its study included OpenAI, Amazon, Alphabet, Microsoft, and Anthropic.
In the filing, Musk’s lawyers also argue that OpenAI should be prohibited from “profiting by wrongfully obtaining competitively sensitive information or coordination through the Microsoft-OpenAI board interlock.”
OpenAI originally debuted as a non-profit in 2015 before switching to a so-called profit cap model in 2019. Here, the OpenAI non-profit was the controlling entity of the for-profit subsidiary. It is in the process of converting to a fully for-profit public utility that could make it more attractive to investors. The restructuring plan will also allow OpenAI to maintain its nonprofit status as a separate entity, CNBC previously reported.
Microsoft has invested about $14 billion in OpenAI, but said in its fiscal first-quarter earnings report in October that it would post a $1.5 billion loss in the current period due to expected losses from OpenAI.
Last October, OpenAI closed a major funding round that valued the startup at $157 billion. Thrive Capital led the funding, and investors including Microsoft and Nvidia also participated.
OpenAI faces increasing competition from startups and tech giants like xAI and Anthropic. Google. The generative AI market is expected to surpass $1 trillion in revenue within 10 years, and corporate spending on generative AI has surged 500% this year, according to recent data from Menlo Ventures.
CNBC reached out to Musk’s lawyer on Saturday. They did not respond to a request for comment.
— CNBC’s Hayden Field contributed reporting.
see: Elon Musk emerges as a key voice in Trump’s technology policy.
