Elon Musk is escalating his legal battle with OpenAI and Microsoft, seeking between $79 billion and $134 billion in damages, according to a recent Bloomberg report. The suit alleges that the companies abandoned their original nonprofit mission in pursuit of commercial gain, a move Musk claims defrauded him of a considerable stake in the now-$500 billion AI giant he helped found in 2015. The legal challenge highlights growing tensions over the ethics and governance of increasingly powerful artificial intelligence technologies, and raises questions about the future of OpenAIS structure as it competes in a rapidly evolving market.
Elon Musk is seeking between $79 billion and $134 billion in damages from OpenAI and Microsoft, according to a Bloomberg report, escalating a legal battle centered on the future of artificial intelligence. The Tesla CEO alleges he was defrauded when the companies abandoned their original non-profit mission. The substantial claim is based on an assessment by financial economist C. Paul Wazzan, who specializes in valuation and damages in complex economic litigation and has reportedly served as an expert witness in numerous similar cases.
Wazzan’s calculation stems from Musk’s initial $38 million investment in OpenAI’s founding in 2015, which he argues entitles him to a significant stake in the company’s current $500 billion valuation. The requested compensation would represent approximately a 3,500-fold return on Musk’s original investment. At its core, the lawsuit questions whether OpenAI violated its founding principles by transitioning from a non-profit organization to a for-profit entity. The case underscores the growing tensions surrounding the commercialization of AI and the responsibilities of its leading developers.
Details of the origins of OpenAI, and casting a critical light on those involved, can be found in Elon Musk’s complaint against OpenAI CEO Sam Altman, as well as a blog post from OpenAI responding to the lawsuit.
Key Details from Musk’s Lawsuit Against OpenAI
Table of Contents
- Key Details from Musk’s Lawsuit Against OpenAI
- 1. Disparity in Founding Investments
- 2. Allegation of a “Get-Rich-Quick” Scheme
- 3. Brockman’s Private Journal Entries
- 4. Admission of Ethical Concerns
- 5. Transfer of Intellectual Property
- 6. The Illusion of Profit Caps
- 7. Microsoft’s Internal Skepticism
- 8. Microsoft’s Extensive Control
- 9. Concealment of Security Flaws
- 10. Hand-Picked Board Following Altman’s Return
- 11. Microsoft’s Role in Board Selection
- 12. “Charter 2.0”: A Departure from Idealism
- 13. Musk’s Role in Key Hires
- 14. Secret Negotiations with Microsoft Shortly After Musk’s Departure
- 15. Musk’s “Teslas” as Incentives
- 16. Downplaying the Situation to Musk
- 17. Plans for a Trillion-Dollar IPO
- 18. Circumventing Tax-Exempt Status
- 19. Microsoft as a “Lifeline” for Altman
- 20. The “Inversion” of the Mission
- OpenAI’s Response
- 1. Elon Sought Absolute Control and Majority Ownership
- 2. Elon Agreed to the For-Profit Structure
- 3. Elon’s Children to Control AGI
- 4. $80 Billion for Mars City as Motivation
- 5. Elon Leveraged OpenAI for Tesla Autopilot
- 6. Elon Proposed Tesla Merger
- 7. Elon Predicted OpenAI’s Failure Without Him
- 8. Strategic Harassment to Benefit xAI
- 9. Elon Created an OpenAI PBC Himself
- 10. No One Lied to Elon
- Context and Background
1. Disparity in Founding Investments
Musk contributed $38 million, while other founders provided minimal funding.
“In sharp contrast to Musk’s $38 million, Altman contributed only $3.8 million to OpenAI. […] Brockman never contributed anything.”
2. Allegation of a “Get-Rich-Quick” Scheme
Musk contends that after his departure, the founders transformed the non-profit into a profit-driven venture.
“But once Musk left the nonprofit, his co-founders reinvented OpenAI as a get rich quick scheme, selling out the nonprofit for personal gain.”
3. Brockman’s Private Journal Entries
Internal records from Greg Brockman reveal a desire to generate billions of dollars.
“[O]ur plan[:]… it would be nice to be making the billions. we’ve been thinking that maybe we should just flip to a for profit. making the money for us sounds great and all.”
4. Admission of Ethical Concerns
Brockman internally acknowledged that a shift to a for-profit model without Musk’s involvement would be unethical.
“[I]t’d be wrong to steal the non-profit from [Musk]. to convert to a b-corp without him. that’d be pretty morally bankrupt.”
5. Transfer of Intellectual Property
Nearly all valuable assets were transferred from the non-profit to the for-profit division.
“OpenAI transferred ’substantially all‘ its intellectual property to the for-profit and all its full-time employees.”
6. The Illusion of Profit Caps
According to the lawsuit, the profit limitations for investors are set so high as to be effectively meaningless.
“OpenAI would have to hit a ‚home run‘ for the nonprofit to receive its residual stake. […] investors would have to earn ’north of 250 billion‘ before the nonprofit received any residual.”
7. Microsoft’s Internal Skepticism
Microsoft employees internally questioned the non-profit structure’s altruistic nature.
“Given the cap is actually larger than 90% of public companies, I am not sure it is terribly constraining nor terribly altruistic if made transparent…”
8. Microsoft’s Extensive Control
OpenAI granted Microsoft significant influence over strategic decisions.
“OpenAI granted Microsoft approval rights over all ‚major decisions.’“
9. Concealment of Security Flaws
Altman allegedly withheld safety concerns from the board to protect commercial objectives.
“Altman repeatedly concealed safety process failures from OpenAI’s nonprofit board to advance OpenAI’s commercial objectives.”
10. Hand-Picked Board Following Altman’s Return
After a brief removal and reinstatement, Altman populated the board with loyalists.
“Altman then hand-picked a new board focused on loyalty and commercial priorities rather than AI safety.”
11. Microsoft’s Role in Board Selection
Microsoft actively participated in choosing the new board members.
“Microsoft actively participated in selecting those board members by suggesting candidates and opining on Altman’s proposals.”
12. “Charter 2.0”: A Departure from Idealism
In an internal document, Brockman conceded that the original non-profit idea was viewed as a “mistake.”
“over the past eight years we’ve grown to regard capitalism not as a constraint but instead as a positive force….“
13. Musk’s Role in Key Hires
Without Musk’s reputation, OpenAI would not have been able to attract key personnel like Ilya Sutskever.
“Musk played a key role in recruiting top talent, such as OpenAI’s Chief Scientist Ilya Sutskever. […] Sutskever was ‚incredibly in awe [and] impressed with Elon Musk’s involvement’“
14. Secret Negotiations with Microsoft Shortly After Musk’s Departure
Altman quickly sought commercial partnerships after Musk left OpenAI.
“Altman reached out to Microsoft to discuss OpenAI’s plans for a ’new commercial venture‘ mere weeks after Musk left OpenAI.”
15. Musk’s “Teslas” as Incentives
Musk personally gifted vehicles to employees who later acted against the non-profit’s goals.
“Musk personally donated the four Teslas (and a related upgrade) directly to OpenAI. […] [in] appreciation for what [they’ve] done to get OpenAI to where it is today.”
16. Downplaying the Situation to Musk
Altman assured Musk in 2019 that investors were not expecting a profit.
“We did this in a way where all investors are clear that they should never expect a profit.”
17. Plans for a Trillion-Dollar IPO
The lawsuit alleges OpenAI is already planning a massive initial public offering for 2026.
“Even now, OpenAI is plotting a trillion-dollar initial public offering for sometime in 2026.”
18. Circumventing Tax-Exempt Status
Because OpenAI initially lacked 501(c)(3) status, YC.org was used as a “conduit” for Musk’s funds.
“OpenAI directed donors to use that entity [YC.org] as a conduit because OpenAI had not yet obtained its own 501(c)(3) status.”
19. Microsoft as a “Lifeline” for Altman
When the board fired Altman, Microsoft immediately intervened to secure control.
“Faced with the prospect of OpenAI disintegrating, nearly all of OpenAI’s independent board members were forced to resign.”
20. The “Inversion” of the Mission
Musk describes the process as a gradual reversal of all original promises.
“OpenAI, ‚by degrees, inverted the entire mission of the company, [went] from a nonprofit open source to a closed for-maximum-profit company by degrees.’“
OpenAI’s Response
In response, OpenAI published a detailed blog post titled “The Truth Elon Left Out.” The company presents court documents with additional context to refute Musk’s claims. The AI developer has become a central player in the rapidly evolving tech landscape, and the outcome of this dispute could have significant implications for the industry.
Key points of OpenAI’s defense:
1. Elon Sought Absolute Control and Majority Ownership
OpenAI asserts that negotiations failed in 2017 because Musk demanded full control.
“Negotiations over an OpenAI for-profit with Elon fell through in September 2017 because we wouldn’t give him absolute control.”
2. Elon Agreed to the For-Profit Structure
Contrary to his lawsuit, Musk had agreed to the for-profit structure he now opposes.
“Elon did not think that OpenAI needed to remain solely a non-profit. As the context shows, he agreed that OpenAI needed both a non-profit and a for-profit entity—the exact structure OpenAI has today, and that Elon is now suing OpenAI over.”
3. Elon’s Children to Control AGI
Musk surprisingly suggested his children should control AGI.
“when we discussed succession he surprised us by talking about his children controlling AGI.”
4. $80 Billion for Mars City as Motivation
Musk justified his demand for majority ownership with his Mars project.
“Elon said he wanted to accumulate $80B for a self-sustaining city on Mars, and that he needed and deserved majority equity.”
5. Elon Leveraged OpenAI for Tesla Autopilot
Before structure negotiations, Musk had OpenAI employees work on Tesla’s Autopilot.
“Even before negotiations over OpenAI’s structure began, Elon leveraged OpenAI for the benefit of his for-profit ventures. For example, in early 2017, he asked OpenAI to send a team to help fix Tesla’s self-driving program, Autopilot.”
6. Elon Proposed Tesla Merger
After for-profit negotiations failed, Musk attempted to integrate OpenAI into Tesla.
“he began trying to convince us that merging OpenAI into Tesla was the only path to the mission, and it seemed that he would pursue an AGI competitor within Tesla regardless.”
7. Elon Predicted OpenAI’s Failure Without Him
Upon leaving, Musk predicted OpenAI could not succeed without him.
“On Elon’s way out, he said that he supported us pursuing the path we saw to raising billions of dollars—he just didn’t think we could succeed”
“By February 2018, Elon had decided that OpenAI would not be able to raise sufficient funding.”
8. Strategic Harassment to Benefit xAI
OpenAI accuses Musk of systematically favoring xAI with lawsuits.
“Elon’s latest variant of this lawsuit is his fourth attempt at these particular claims, and part of a broader strategy of harassment aimed at slowing us down and advantaging his own AI company, xAI.”
9. Elon Created an OpenAI PBC Himself
Ironically, Musk himself established a for-profit structure for OpenAI.
“Shortly after this call, Elon actually created an OpenAI PBC (or ‚B-corp‘).”
10. No One Lied to Elon
OpenAI refutes Musk’s claim that they concealed their for-profit plans from him.
“No one ever lied to Elon; no one ever told him they’d accepted his terms when they hadn’t.”
“Their preference was not a secret; the thinking was shared with Elon and his key staff.”
Context and Background
OpenAI alleges Musk selectively presented excerpts from Greg Brockman’s journals, lacking crucial context. The blog post provides the full conversation for several passages cited by Musk. The dispute highlights the complex challenges of balancing innovation with ethical considerations in the rapidly evolving field of artificial intelligence.
According to OpenAI, the current lawsuit represents Musk’s “fourth attempt” with these allegations, characterizing it as part of a broader “harassment strategy” aimed at benefiting his own AI company, xAI.
