News Analysis
It was hard to miss the recent news that former OpenAI co-founder Elon Musk filed a lawsuit against San Francisco-based OpenAI and co-founders Sam Altman and Greg Brockman. If you’re wondering how this cadre of tech elite came to this, you have to look back to the early days of OpenAI, understand some tech history and squint skeptically at the motives and public statements of billionaires with skin in the game.
What is the Lawsuit About?
Before launching into a primer on the history of artificial intelligence (AI) and Musk’s beliefs about the dangers it presents to humanity, the suit lists Musk’s five-point complaint against the makers of ChatGPT, et al: 1) breach of contract, 2) promissory estoppel, 3) breach of fiduciary duty, 4) unfair competition under Cal. Bus. & Prof. Code, section 17200 ET SEQ. and 5) accounting.
The suit puts forth a demand for a jury trial.
But the beauty is in the details. And in those, amid a history of AI and definitions and explanations of the technology — particularly the distinction between AI and its near-sentient offspring artificial general intelligence (AGI) — the suit claims that “where some like Mr. Musk see an existential threat in AGI, others see AGI as a source of profit and power.” It also delves deeply into how Musk — and OpenAI’s charter — wants AI to be free, open-source and not the weapon of any one corporate power.
It might be true that Musk, like many others, sees AGI as a “grave threat to humanity,” as stated in the suit, and that he’s motivated by a desire to see it remain free and open. This sounds altruistic and noble. But it appears, from the suit itself and other sources, that Musk also sees AI as a source of profit and power and that he might be motivated, at least in part, by his loss of both and Microsoft’s gain of the same via OpenAI.
In a video shared from Musk’s X account, he says that it’s weird that a nonprofit can transform, after taking money, into a for-profit company. “Let’s say you funded an organization to save the Amazon rainforest,” he explains. “And instead, they became a lumber company, chopped down the forest and sold it for money. You would be like, that’s the exact opposite of what I gave them the money for. Is that legal? That doesn’t seem legal.”
The video was posted to X by Teslaconomics and states, “This is why Elon is suing OpenAI.” Musk says on X, “Yeah.”
By his own account, then, the lawsuit is about money and mission.
OpenAI Rejects Musk's Claims in Court
OpenAI states its counterclaims to Musk's suit in a court filing response, calling Musk's claims “incoherent,” “frivolous,” “extraordinary” and “a fiction,” according to CNN.
OpenAI’s filing claims that OpenAI "did not have a founding agreement or any other agreement with Musk related to his funding of the company," CNN reports. The filing states that Musk could use the discovery process to “seek access to OpenAI’s proprietary records and technology.”
OpenAI also calls for an “early and swift dismissal” of the lawsuit by Musk.
OpenAI Timeline: From Nonprofit to For-Profit Company
To understand how this once legendary collaboration turned sour, it’s important to know the timeline.
Things started in December of 2015. That’s when Altman, Brockman, Reid Hoffman, Jessica Livingston, Peter Thiel, Musk, AWS, Infosys and YC research announced the formation of OpenAI. Musk was the largest donor, dropping $45 million into the venture. The mission of the nonprofit company — to ensure that artificial general intelligence benefits all of humanity — drew some of the best AI minds in the world to the effort.
In 2017, OpenAI alleges that Musk and the OpenAI team realized that getting to AGI would require such vast amounts of compute power that the team would need a lot more money. OpenAI alleges that they discussed a for-profit structure, and Musk agreed — but he wanted complete control and to merge the venture with Tesla.
In 2018, Musk resigned his board seat at OpenAI. He publicly claimed the OpenAI effort presented a conflict of interest, because Tesla was also focused on AI. OpenAI alleges that, “Elon left OpenAI, saying there needed to be a relevant competitor to Google/DeepMind and that he was going to do it himself.”
In 2019 and 2021 and again in 2023, Microsoft invested heavily in OpenAI, reportedly committing to invest $13 billion total, claiming it believed in OpenAI’s vision of a shared, safe AI. “Microsoft shares our values, and we are excited to continue our independent research and work toward creating advanced AI that benefits everyone,” said Altman in the Microsoft announcement last year. Microsoft currently owns a reported 49% stake in the company.
In November of 2022, ChatGPT launched and startled the world with its intelligence. A little over a year later, it was hailed as the fastest-growing software in history, with 100 million users. Many other companies began launching AI competitors.
On November 4, 2023, xAI, Musk’s own AI venture, launched Grok. Tesla is also incorporating and working on AI. And Musk’s Neuralink is an AI-adjacent venture working on implantable brain-computer interfaces.
See more: What Is Grok? Elon Musk's 'Rebellious' New AI
On February 7, 2023, Microsoft launched Copilot, built on ChatGPT, and began embedding it into many of its popular tools. This was good for Microsoft’s bottom line and share price.
See more: Microsoft Dominates AI Race With Copilots for Everything
Microsoft Backs Altman and OpenAI Commercialization
Musk’s lawsuit alleges that GPT-4 — OpenAI’s latest and most powerful multimodal large language model (LLM), made public in March of 2023 — is where “Mr. Altman caused OpenAI to radically depart from its original mission and historical practice of making its technology and knowledge available to the public.”
After touting the astonishing intelligence of this release, hinting that it has achieved the illusive and dangerous goal of AGI, the suit alleges, “Although developed by OpenAI using contributions from Plaintiff and others that were intended to benefit the public, GPT-4 is now a de facto Microsoft proprietary algorithm, which it has integrated into its Office software suite.”
See more: OpenAI Lets Everyone Build Their Own ChatGPT and Turbo-Charges GPT-4
Musk is not the first to take issue with Altman’s commitment to OpenAI’s founding mission. OpenAI’s own board might have removed CEO Altman for exactly this reason, according to NPR, in late 2023.
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OpenAI’s own people had questions about Altman’s commitment to the nonprofit aspect of the venture at that time. An anonymous letter to the board from former OpenAI employees says, “We implore you, the Board of Directors, to remain steadfast in your commitment to OpenAI's original mission and not succumb to the pressures of profit-driven interests. The future of artificial intelligence and the well-being of humanity depend on your unwavering commitment to ethical leadership and transparency."
The letter alleges that anyone who voiced concerns about the direction of the company was silenced or pushed out.
Current employees rallied to Altman’s side. More than 730 of the company’s employees signed a petition saying they would leave the company unless the current board resigned and Altman was restored as CEO. Microsoft offered them all jobs. It worked. Altman was only out of work for two weeks.
See more: Sam Altman Returns to OpenAI: How the Chaos Changes the AI Field
“After Altman was reinstated, Microsoft solidified its influence over OpenAI by securing a permanent position on its board,” writes Jurica Dujmovic at MarketWatch. “Furthermore, the restructuring of OpenAI’s board to include business-oriented members, rather than AI experts or ethicists, signaled a permanent shift in the organization’s priorities and marked a pivotal turn toward a profit-driven model underpinned by corporate governance.”
Musk’s lawsuit comes after the public drama over Altman’s leadership and the solidified role Microsoft gained in OpenAI and the AI market.
Since Musk is making his own AI play — with xAI and Tesla — it must be galling to find himself facing Microsoft as a competitor, especially after ponying up $45 million to OpenAI’s nonprofit, open-source dream. That $45 million is a fraction of Microsoft’s $13 billion. But it is likely much more than he’d want to donate to the for-profit Microsoft, which is leveraging AI to pull ahead of its competitors.
Did OpenAI Sell Out?
Jason Kwon, OpenAI’s chief strategy officer, says in an internal memo that was viewed by CNBC, “The claims in this suit may stem from Elon’s regrets about not being involved with the company today.” But did the company, as Musk puts it, change its mission from saving the rainforest to chopping it down and selling the wood for profit?
OpenAI did create a subsidiary with a “capped profit” structure in 2019. This for-profit venture is legally bound to follow the mission of the nonprofit arm of the company. This hybrid structure is challenging but, according to OpenAI, necessary. Up to the point it created the for-profit arm, the company had received $130.5 million in donations. Not enough, given the compute power the venture required and the price of talent working in the AI space. It needed the money and the investors a for-profit venture could generate.
Sweetening the pot did bring in a dream investor: Microsoft.
OpenAI claims that ChatGPT is not owned or governed by Microsoft, as Musk claims, and that it is operating within the law and following its own charter. “We decide what to research and build, how to run the company, who our products serve and how to live out our mission," says Kwon in an internal memo shown to Axios. "We also directly compete with Microsoft to deliver the best value and products to businesses, developers and everyday people. As we know, OpenAI is the creator of ChatGPT and ChatGPT for Enterprise, while Microsoft offers Copilot and Copilot for Microsoft 365."
OpenAI alleges that neither the structure of OpenAI nor the decision not to release the source code were a problem for Musk before now, claiming, “Elon understood the mission did not imply open-sourcing AGI. As Ilya [Sutskever, co-founder and former chief scientist,] told Elon: ‘As we get closer to building AI, it will make sense to start being less open. The Open in OpenAI means that everyone should benefit from the fruits of AI after its built, but it's totally OK to not share the science…,’ to which Elon allegedly replies, ‘Yup.’”
“These lawsuits are a massive distraction from the goals of getting to AGI and its benefits,” proclaims Vinod Khosla on X. Khosla is a billionaire and the founder of Khosla Ventures, a Menlo Park, California-based venture capital firm that invested in OpenAI.
Are they, though?
See more: OpenAI is a Lot More Vulnerable Than You Think
Unanswered Questions
Is Musk trying to protect the good of humanity? Is he hoping to thwart Microsoft from taking over AI (and AGI) the way it dominated the early days of office software and faced federal antitrust litigation? Is this an epic battle for control over a highly profitable existential threat to humanity? Is his claim that ChatGPT has achieved AGI and should be made free legitimate? Or is the suit regret and an attempt by Musk to get his own piece of the pie — a piece he paid $45 million for nearly a decade ago?
We’ll have to watch the suit unfold to get answers to these questions. Watching billionaires battle over the future of humanity feels a bit like watching the Greek gods battle for their domains. Hopefully, humanity will survive it.
