Lawyers for tech billionaire Elon Musk have sought a preliminary injunction against OpenAI, several of its co-founders, and its investor and close collaborator, Microsoft, to prevent OpenAI and other named defendants from participating in what Musk’s lawyer claims is anti-competitive behavior.
The motion for injunction, which was filed late Friday in the U.S. District Court for the Northern District of California, accuses OpenAI, its CEO Sam Altman, president Greg Brockman, co-founder of Microsoft, LinkedIn and former OpenAI board member Reid Hoffman, and former OpenAI board member and Microsoft vice president Dee Templeton, of various illicit activities and seeks to stop them. The accusations include:
Discourage investors from backing OpenAI rivals like Musk’s own AI company, xAI.
Benefit from “inappropriately obtained competitively sensitive information” through OpenAI’s connections to Microsoft.
Convert OpenAI’s governance structure to a for-profit one and “transfer any material assets, including intellectual property, owned, maintained or controlled by OpenAI, Inc., its subsidiaries or affiliates.”
Cause OpenAI to do business with organizations in which any defendant has a “material financial interest.”
Musk’s lawyers say “irreparable harm” will occur if the injunction is not granted.
“Plaintiffs and the public need a pause,” they wrote in the filing. “A court order to preserve what remains of OpenAI’s nonprofit character, free from proprietary transactions, is the only appropriate remedy. Otherwise, OpenAI promised Musk and the public will be long gone by the time the court arrives. to the bottom of the matter.”
Musk’s lawsuit against OpenAI, which essentially accuses the company of abandoning its original nonprofit mission of making the fruits of its AI research available to everyone, was withdrawn in July, only to be reactivated in late July. this summer. In an amended complaint in November, the suit named new defendants, including Microsoft, Hoffman and Templeton, and two new plaintiffs: Shivon Zilis, a Neuralink executive and former OpenAI board member, and xAI.
Musk has argued in previous lawsuits that he was defrauded of more than $44 million he says he donated to OpenAI by taking advantage of his “well-known concerns about the existential harms” of AI. Musk, one of OpenAI’s co-founders, left the company in 2018 over disagreements over its direction.
Musk formed xAI last year. Shortly after, the company launched Grok, a flagship generative AI model that now powers a number of features on Musk’s social network, X (formerly known as Twitter). xAI also offers an API that allows customers to integrate Grok into third-party applications, platforms, and services.
In the motion for injunction, Musk’s lawyers allege that OpenAI is depriving xAI of capital by obtaining promises from investors not to fund it or its competitors. In October, the Financial Times reported that OpenAI required investors in its latest funding round to refrain from also funding any of OpenAI’s rivals, including xAI.
“Musk has verified that at least one of the lead investors in OpenAI’s October funding round subsequently declined to invest in xAI,” Musk’s lawyer wrote.
Of course, xAI hasn’t had any 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 around $11 billion in the bank, xAI is one of the best-funded AI companies in the world.
Musk’s motion for an injunction also alleges that Microsoft and OpenAI continue to illegally share proprietary information and resources, and that several of the defendants, including Altman, are engaging in self-dealing transactions that harm competition in the market. For example, in the presentation notes, OpenAI selected Stripe, a payment platform in which Altman has “material financial interests,” as OpenAI’s payment processor. (Altman is said to have made billions from his Stripe holdings.)
Microsoft, which first backed OpenAI in early 2019, has ramped up the partnership in recent years, investing a total of ~$13 billion in exchange for what is effectively a 49% share of the company’s profits. Microsoft has also allowed OpenAI to make extensive use of its cloud hardware resources, allowing the startup to train, tune and run AI models like those powering ChatGPT.
Hoffman’s position on the boards of Microsoft and OpenAI, while he was also a partner at the investment firm Greylock, gave Hoffman an insider’s view of the companies’ dealings, Musk’s lawyers argue. (Hoffman resigned from the OpenAI board of directors in 2023.) As for Templeton, whom Microsoft briefly named as a non-voting observer on OpenAI’s board, Musk’s lawyer argues that she was in a position to facilitate deals between Microsoft and OpenAI that would violate antitrust rules.
“Maintaining OpenAI’s charitable status until final resolution and stopping further self-dealing by Altman protects both the organization’s founding mission and the public interest in the proper administration of charities,” the lawyers for OpenAI wrote. Musk.
Musk’s lawyer wrote that if an injunction is not granted, OpenAI could “lack sufficient funds” to pay damages if the court ultimately rules in Musk’s favor. (OpenAI is reportedly spending more than $5 billion and is nowhere near breaking even.) Furthermore, they say, if a judge were to reject OpenAI’s nonprofit transition, it would be “virtually impossible” to “resolve” the company’s transactions without “widespread investor loss” should OpenAI continue to accept new investments.
“No objective observer can look at OpenAI today and say that it bears any resemblance to what it promised to be,” Musk’s lawyers wrote. “Plaintiffs respectfully request that the court maintain the status quo and stop the defendants’ worsening behavior until final resolution.”
OpenAI did not immediately respond to TechCrunch’s request for comment. The company had previously attempted to dismiss Musk’s lawsuit, calling it “bullying” and baseless.
