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OpenAI has countersued Elon Musk over his alleged efforts to stunt the company’s growth amid OpenAI's push to switch from a nonprofit to a for-profit entity. "Elon’s nonstop actions against us are just bad-faith tactics to slow down OpenAI and seize control of the leading AI innovations for his personal benefit. Today, we counter-sued to stop him," OpenAI says.
The countersuit was filed in a US District Court in California on Wednesday. It comes after Musk first sued OpenAI and CEO Sam Altman in March 2024, alleging breach of contract because OpenAI strayed from its founding mission. A few months later, Musk dropped that lawsuit but renewed the legal fight in August, alleging wire fraud, among other claims.
In December, Musk filed an injunction aiming to stop OpenAI from becoming a for-profit company. A judge denied that request but agreed to expedite the trial.
Musk, who co-founded OpenAI in 2015 with Altman and Greg Brockman, claims that a for-profit model would steer the company away from its original mission to develop artificial general intelligence (AGI) that benefits all humanity and would cause “widespread investor losses and market disruption."
OpenAI claims that Musk wanted to merge the company with Tesla and turn it into a for-profit entity in 2017 and 2018, citing emails with Musk. Altman and Brockman rejected that request.
"Over and over in OpenAI’s early years, Musk predicted that the enterprise would fail unless it bowed to his vision, his plans, and his control," OpenAI says in its countersuit. Musk left OpenAI's board in 2018, at which time he 'declared OpenAI was 'on a path of certain failure relative to Google.'" When OpenAI and ChatGPT took off in 2022, "Musk could not abide it," the suit says.
Musk maligned ChatGPT as a propaganda machine and launched an OpenAI competitor called xAI in 2023, which includes a ChatGPT rival called Grok. He "set in motion a campaign of harassment, interference, and misinformation designed to take down OpenAI and clear the field for himself," OpenAI says.
Musk also made an unsolicited offer to buy OpenAI for $97.4 billion in February, but it was unanimously rejected by the board. Altman mocked Musk by making a counter-offer to buy X for $9.7 billion. (The next month, xAI acquired X for $33 billion.)
“Musk should be enjoined from further unlawful and unfair action and held responsible for the damage he has already caused,” OpenAI says in its countersuit.
According to OpenAI, a for-profit structure will allow the company “to better compete for capital and top talent” in the AGI race. Furthermore, to secure the entire $40 billion from its current fundraising round, the company needs to complete the transition by the end of this year, according to Reuters.
A jury trial of the case is set to begin in spring next year. Musk expanded the case in November by adding Microsoft as a defendant.