Elon Musk files for an injunction to halt OpenAI’s transition to a for-profit platform

Tech billionaire Elon Musk’s lawyers have filed searching for a preliminary injunction against OpenAI, several of its co-founders, and investor and shut associate Microsoft, to prevent OpenAI and other named defendants from engaging in conduct that Musk’s lawyer argues constitutes anti-competitive conduct.

The injunction request, filed late Friday within the U.S. District Court for the Northern District of California, accuses OpenAI, its CEO Sam Altman, CEO Greg Brockman, Microsoft, LinkedIn co-founder and former OpenAI board member Reid Hoffman, and former OpenAI board and Microsoft Vice President Dee Templeton about various illegal activities – and tries to stop them. The allegations include:

1. Discouraging investors from supporting OpenAI rivals like xAI, Musk’s artificial intelligence company.
2. Profiting from “illegally obtained confidential information” through OpenAI’s ties to Microsoft.
3. Transforming OpenAI’s management structure into a for-profit organization and “transferring all tangible assets, including intellectual property owned, held or controlled by OpenAI, Inc., its subsidiaries or affiliates.”
4. Requiring OpenAI to do business with organizations during which any defendant has a “material financial interest.”

Musk’s attorneys say he’ll suffer “irreparable harm” if the order shouldn’t be issued.

“Plaintiffs and society need a moment of rest,” they wrote within the lawsuit. “A mandate to preserve what remains of OpenAI’s non-profit nature, free from self-interest, is the only appropriate remedy. If not, OpenAI has promised Musk, and the public will be long gone by the time the court gets to the merits of the matter.”

The motion is the newest salvo in Musk’s legal battle with OpenAI, which at its core accuses the corporate of abandoning its original non-profit mission of constructing artificial intelligence research available to everyone. Musk he withdrew suit in July, only until bring it to life late this summer. Some corrected criticism earlier this month named recent defendants, including Microsoft, Hoffman and Templeton, and two recent plaintiffs: Shivon Zilis, a Neuralink executive and former OpenAI board member, and xAI.

Musk has argued in previous complaints that he was defrauded of greater than $44 million, which he says he gave to OpenAI, preying on his “well-known concerns about existential harm” related to artificial intelligence. Musk, certainly one of OpenAI’s co-founders, left the corporate in 2018 due to disagreements over its development direction.

OpenAI launched in 2015 as a nonprofit and transitioned to a limited-profit organization in 2019, with the nonprofit becoming the managing entity of the for-profit subsidiary. The company is within the means of transforming into a fully profit-oriented company apparently allow OpenAI to maintain its nonprofit status as a separate entity.

Musk created his answer to OpenAI, xAI, last yr. Shortly thereafter, the corporate released Grok, an artificial intelligence model that now powers many features on Musk’s social network X (formerly referred to as Twitter). xAI also offers an API that enables customers to embed Grok into third-party applications, platforms and services.

In the request for an injunction, Musk’s lawyers accuse OpenAI of depriving xAI of capital by obtaining guarantees from investors that they’ll not finance him and competitors. In October, the Financial Times. reported that OpenAI required investors in its latest funding round to refrain from financing any of OpenAI’s competitors, including xAI.

“Musk has verified that at least one large investor in OpenAI’s October funding round subsequently declined to invest in xAI,” a Musk adviser wrote.

Of course, xAI has had no trouble raising money recently. The startup reportedly closed a $5 billion round this month with participation from outstanding investors including Andreessen Horowitz and Fidelity. With a bank value of roughly $11 billion, xAI is one of the well-funded artificial intelligence firms on this planet.

Musk’s request for an injunction also alleges that Microsoft and OpenAI proceed to illegally share proprietary information and resources and that several defendants, including Altman, engage in self-interested interests that harm competition within the marketplace. For example, in its filing notes, OpenAI chosen Stripe, a payments platform during which Altman has a “significant financial interest,” as OpenAI’s payment processor. (Altman is claimed to have created billions from his Stripe estate.)

Microsoft, which first supported OpenAI in early 2019, has increased its partnership over the past few years, investing a total of ~$13 billion in exchange for an effective 49% share of the corporate’s profits. Microsoft has also allowed OpenAI to make extensive use of hardware resources within the cloud, allowing the startup to train, tune and run artificial intelligence models equivalent to those who support ChatGPT.

Hoffman’s position on the boards of Microsoft and OpenAI, in addition to a partner on the investment firm Greylock, gave Hoffman privileged insight into the businesses’ interests, Musk’s lawyers argue. (Hoffman stepped down from the OpenAI board in 2023.) As for Templeton, whom Microsoft briefly appointed a non-voting observer of OpenAI’s board, Musk’s lawyer claims she was able to facilitate agreements between Microsoft and OpenAI that may violate antitrust rules .

“Maintaining OpenAI’s charitable status pending final resolution and halting further proprietary trading by Altman protects both the organization’s founding mission and the public interest in the proper governance of charities,” Musk’s lawyers wrote.

Musk’s adviser wrote that if an injunction shouldn’t be granted, OpenAI may “lack sufficient funds” to pay damages if a court ultimately rules in Musk’s favor. (OpenAI is apparently spends over $5 billion and is nowhere near break-even). Moreover, they argue, if the judge had not allowed OpenAI to transition to a nonprofit organization, it might have been “virtually impossible” for the corporate’s deals to “grow forward” without “widespread investor losses” or should OpenAI proceed to accept recent investments.

“No objective observer can look at OpenAI today and say that it in any way resembles what it was intended to be,” Musk’s lawyers wrote. “Plaintiffs respectfully ask the court to maintain the status quo and halt defendants’ deteriorating conduct pending final judgment.”

In a statement, an OpenAI spokesperson said: “Elon’s fourth attempt, which again relies on the same baseless complaints, continues to be unsuccessful. completely without merit” The company had previously sought to dismiss Musk’s lawsuit, calling it “noisy” and baseless.