Musk again asks to block OpenAI’s ‘illegal’ conversion to for-profit model

Billionaire Elon Musk has filed another motion to block ChatGPT-creator firm OpenAI from converting to a for-profit enterprise while also alleging it has been engaging in anti-competitive practices.

Musk accused OpenAI, its CEO Sam Altman, President Greg Brockman and stakeholder Microsoft of violating terms of Musk’s “foundational contributions to the charity,” according to the motion for a preliminary injunction filed on Nov. 30.

Musk co-founded OpenAI in 2015 and was an early board member until he left the company in 2018. 

He has since launched xAI — the firm behind AI chatbot Grok — which he said is falling victim to OpenAI’s anti-competitive practices.

“OpenAI’s path from a non-profit to for-profit behemoth is replete with per se anticompetitive practices, flagrant breaches of its charitable mission, and rampant self-dealing,” Musk’s lawyers wrote.

Through a “series of exclusive arrangements” with Microsoft, the two companies have engaged in “predatory practices” — enabling them to seize control of nearly 70% of the generative AI market, lawyers for Musk said:

“Microsoft and OpenAI now seek to cement this dominance by cutting off competitors’ access to investment capital, while continuing to benefit from years’ worth of shared competitively sensitive information during generative AI’s formative years.”

Allowing this conduct to continue will hurt xAI and members of the public, many of which have become increasingly concerned about “rushed” and “unsafe” AI products, they added.

“OpenAI’s illegal deviation from that mission betrays not just Musk, but us all.”

California laws allow a nonprofit to convert to a “for-profit stock corporation” but not limited liability companies.

OpenAI notes it remains nonprofit at its core but established a for-profit subsidiary capable of issuing equity to raise capital and hiring world-class talent. However, those tasks are to be administered at the direction of the nonprofit. 

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An injunction to preserve what is left of OpenAI’s nonprofit character is the only “appropriate remedy,” Musk’s lawyers said.

“No objective observer can look at OpenAI today and say it bears any resemblance whatsoever to what it promised to be. Enough is enough.”

An OpenAI spokesperson slammed Musk’s latest attempt in a note to Cointelegraph:

“Elon’s fourth attempt, which again recycles the same baseless complaints, continues to be utterly without merit.”

In March, OpenAI leaked emails from Musk in 2015 showing support for the firm to find over $1 billion in funding to compete with the likes of Google and Facebook (now Meta).

OpenAI previously said Musk was harassing the firm in a related October filing.

“Since launching a competing artificial intelligence company, xAI, Musk has been trying to leverage the judicial system for an edge. The effort should fail; Musk’s complaint does not state a claim and should be dismissed,” OpenAI added.

In June, Musk threatened to ban Apple devices at his companies when Apple touted integrating OpenAI’s ChatGPT into its iPhone, iPad and Mac operating systems. Months later, Apple launched Apple Intelligence on Oct. 28.

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