Attorneys for tech billionaire Elon Musk have filed for a preliminary injunction against OpenAI, several of its founders, and its investor and close collaborator, Microsoft, to prevent OpenAI and other alleged defendants from engaging in what Musk’s attorney says is anti-competitive behavior.
The motion for summary judgment, filed Friday in the US District Court for the Northern District of California, accuses OpenAI, its CEO Sam Altman, President Greg Brockman, Microsoft, LinkedIn founder and former OpenAI board member Reid Hoffman, and former board member of OpenAI and Microsoft VP Dee Templeton of various illegal activities and wants to stop it. Allegations include:
- Discouraging investors from backing OpenAI rivals such as Musk’s AI company, xAI.
- Benefiting from “competitively misappropriated knowledge” through OpenAI’s tie-up with Microsoft.
- Converting OpenAI’s governance structure to for-profit and “transferring any tangible assets, including intellectual property owned, owned, or controlled by OpenAI, Inc., its subsidiaries, or affiliates.”
- To cause OpenAI to do business with entities in which any defendant has a “pecuniary interest.”
Musk’s lawyers argued that “irreparable harm” would result if the injunction was not granted.
“Plaintiffs and the public need to rest,” they wrote in the filing. “An injunction to preserve what remains of OpenAI’s non-profit character, without arbitrariness, is the only appropriate remedy. If not, OpenAI has promised Musk and the public it will be gone by the time the court reaches the hearings. “
Musk’s lawsuit against OpenAI, which primarily accuses the company of abandoning its original nonprofit mission to make the fruits of its AI research available to all, was dropped in July, but was renewed later this summer. In an amended complaint in November, the lawsuit named new defendants including Microsoft, Hoffman, and Templeton, as well as two new plaintiffs: Shivon Zilis, Neuralink CEO and former OpenAI board member, and xAI.
Musk has argued in previous suits that he was defrauded of more than $44 million he said he donated to OpenAI in response to his “known concerns about the inherent harms” of AI. Musk, one of the founders of OpenAI, left the company in 2018 due to disagreements about its direction.
In the proposed rule, Musk’s lawyers say OpenAI is depriving xAI of money by extracting promises from investors not to fund it and competition. In October, the Financial Times reported that OpenAI demanded that investors in its latest funding round refrain from funding any of OpenAI’s competitors, including xAI.
“Musk confirmed that at least one major investor in OpenAI’s October funding round declined to invest in xAI,” Musk’s attorney wrote.
Of course, xAI has had no trouble raising money lately. The startup reportedly closed a $5 billion round this month with participation from prominent investors including Andreessen Horowitz and Fidelity. With nearly 11 billion in the bank, xAI is one of the most funded AI programs in the world.
Musk’s proposal for a legal order also says that Microsoft and OpenAI continue to share information and resources illegally, and that several opponents, including Altman, engage in sales that harm market competition. For example, the filing notes, OpenAI has selected Stripe, a payment platform in which Altman has a “significant financial interest,” as OpenAI’s payment processor. (Altman reportedly made billions from his Stripe property.)
Microsoft, which began funding OpenAI in early 2019, has grown the partnership over the past few years, investing a total of ~$13 billion for what amounts to a 49% share of the company’s revenue. Microsoft has also allowed OpenAI to make the most of its cloud computing resources, allowing startups to train, fine-tune, and deploy AI models like those that power ChatGPT.
Hoffman’s position on the boards of Microsoft and OpenAI while also being a partner at investment firm Greylock gave Hoffman a privileged view of the companies’ interactions, Musk’s lawyers said. (Hoffman steps down from OpenAI’s board in 2023.) As for Templeton, who was briefly appointed by Microsoft as a non-voting board observer at OpenAI, Musk’s lawyer says he was in a position to make deals between Microsoft and OpenAI that would violate antitrust laws.
“Maintaining OpenAI’s charitable status pending a final decision and halting Altman’s other personal transactions protects both the founding purpose of the organization and the public interest in the proper management of charitable organizations,” Musk’s lawyers wrote.
Musk’s counsel wrote that if the injunction is granted, OpenAI may “lack sufficient funds” to pay damages if the court ultimately finds in Musk’s favor. (OpenAI has reportedly spent more than $5 billion and is nowhere near breaking the law.) Moreover, they say, had the judge denied OpenAI’s nonprofit conversion, it would have been “virtually impossible” to “unbundle” the company’s transactions without “widespread investor losses.” should OpenAI continue to accept new investment.
“No objective observer can look at OpenAI today and say it’s anything like what it promises to be,” Musk’s lawyers wrote. “Plaintiffs respectfully request that the court maintain the status quo and suspend the defendants’ deteriorating behavior pending final resolution.”
OpenAI did not immediately respond to TechCrunch’s request for comment. The company has previously sought to withdraw Musk’s suit, calling it “blusterous” and baseless.
