Elon Musk has filed for a preliminary injunction against OpenAI and its key partners, including Microsoft for alleged anti-competitive practices as stated by his legal team.

The class-action lawsuit was filed in the U.S. District Court for the Northern District of California on Friday evening and names OpenAI, its CEO Sam Altman, President Greg Brockman, Microsoft, and several others associated with the companies.

Tesla CEO’s lawyers say that OpenAI has changed its focus from a non-profit organization and is using tactics that are damaging to the competition in the AI sector.

Elon Musk Files Lawsuit Against OpenAI and Microsoft

According to Elon Musk’s lawyers, OpenAI and Microsoft are engaging in market manipulation to deter investments into competing AI ventures, including Musk’s xAI. The lawsuit alleges that OpenAI coerced investors into not supporting rivals such as xAI that has recently secured funding.

Musk’s attorneys refer to the fact that OpenAI compelled investors in its last funding round not to invest in competing AI ventures, which presents a challenge to organizations like xAI.

Additionally, the injunction aims at stopping OpenAI and Microsoft from taking other actions that may be detrimental to the market such as sharing of property information and invention. The lawsuit alleges that OpenAI has changed the governance of the platform to that of a for-profit business model which is the opposite of what was promised initially. Musk’s legal team claims that this shift violates the initial mission of OpenAI to contribute its AI technologies to the public for the common good.

Microsoft’s Role and Financial Interests

Another key factor of Musk’s case is the vast financial support that Microsoft has provided to OpenAI. Since 2019, Microsoft has pumped in more than $13 billion into OpenAI and in the process has booked itself a large share of the company’s revenue. 

The complaint states that Microsoft has been using this partnership to acquire information and assets from OpenAI, including the AI models, hosted on Microsoft’s cloud services.

The filing also reveals possible concerns over conflicts of interest. For example, it discusses how Sam Altman, the chairman of OpenAI, has a financial interest in Stripe, the company that OpenAI used for payments. Musk’s team claims that Altman’s relationship with Stripe will create a conflict that can influence OpenAI in a wrong way and hinder competition within the market. These allegations suggest a wider scheme of self-enrichment that Musk’s lawyers state is damaging the AI environment.

xAI’s Growth and Investor Backlash

Although xAI has struggled with fundraising, the company has recently announced that it has closed a $5 billion funding round, with investment from firms like Andreessen Horowitz and Fidelity. Despite Musk’s allegations that OpenAI’s actions have made some investors refrain from investing in xAI, the recent funding received by the company indicates that it has not faced challenges in raising capital.

The lawsuit also mention that Musk’s xAI, which was founded last year, has created its own generative AI named Grok. This model supports several features on Musk’s social network X (previously Twitter). Although xAI is already a financially backed company in the AI field, Musk’s team claims that the current OpenAI’s practices may be detrimental to the company’s future.

Despite these claims, Sam Altman’s OpenAI recently announced a $1.5 billion investment facilitated through a tender offer. The move allowed employees to sell shares to SoftBank, which now holds a significant stake in the company. This transaction adds another layer of complexity to Musk’s claims, as his legal team contends that OpenAI is further distancing itself from its original nonprofit mission in favor of financial gain.

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Kelvin Munene Murithi

Kelvin is a distinguished writer with expertise in crypto and finance, holding a Bachelor’s degree in Actuarial Science. Known for his incisive analysis and insightful content, he possesses a strong command of English and excels in conducting thorough research and delivering timely cryptocurrency market updates.

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