OpenAI has initiated a sweeping legal counteroffensive against one of its co-founders, Elon Musk, and his artificial intelligence venture, xAI, over a bitter dispute that underscores the high-stakes battle for dominance in the burgeoning AGI sector.
Filed yesterday in the U.S. District Court for the Northern District of California, the lawsuit accuses Musk of spearheading a “relentless” and “malicious” campaign to undermine OpenAI’s trajectory after his 2018 exit. Court documents allege the Tesla and X CEO sought to exploit his position to stall progress while building a rival capability, culminating in a purported $97.375 billion bid described by OpenAI as a theatrical “sham” designed to fracture its investor and employee relationships at a critical juncture.
In the filing, OpenAI outlines a pattern of alleged misconduct that began after Musk left the organization in February 2018. The documents claim Musk earned the organization’s success—marked by the rollout of GPT-3, ChatGPT, and GPT-4—after being rebuffed for demanding “absolute control” of OpenAI or merging it into Tesla, per conversations cited between Musk and the lab’s remaining leadership.
Origin story of OpenAI and the departure of Elon Musk
Co-founded in 2015 by current CEO Sam Altman, President Greg Brockman, and Musk, OpenAI was initially conceived as a nonprofit lab with a charter to prioritize humanity’s collective good while advancing artificial general intelligence (AGI)—systems with the potential to surpass human cognitive capabilities. Musk contributed $1 billion in pledged capital, though court records state these funds were never materialized, a deficiency OpenAI asserts “was never satisfied—not even close.”
Tensions emerged between 2017 and 2018, according to the filing, as Musk pushed to consolidate authority over OpenAI’s technical and business decisions or transfer the lab into Tesla’s fold. The suit cites internal correspondence from Chief Scientist Ilya Sutskever cautioning Musk against establishing an “AGI dictatorship,” prompting his eventual exit and pivot to pursue AGI independently. “Musk made it clear the lab would fail without him,” the documents allege, noting his stated intent to development AGI within Tesla.
Restructuring, success, and Musk’s alleged ‘malicious’ campaign
The lab’s 2019 restructuring into a “capped-profit” entity—designed to court institutional investment while preserving nonprofit governance and mission alignment—is portrayed as a strategic masterstroke that Musk initially dismissed and later weaponized against OpenAI. The filing notes Musk was offered equity in the new structure but declined without objection, claiming he was “not interested in profit.”
OpenAI’s explosive growth post-Musk—including viral adoption of its language models—allegedly stoked Musk’s antagonism. The suit details a timeline of contested actions, including his March 2023 creation of xAI, advocacy for an AI research freeze targeting models beyond GPT-4, and theatrical demand for confidential OpenAI records under the guise of transparency. It further accuses Musk of leveraging his 200 million-follower X platform to smear OpenAI as “evil,” “a lie,” and “a total scam,” while urging state attorneys general to probe the lab’s operations with the goal of forcing an investor-unfriendly asset sale.
Of particular note, OpenAI cites Musk’s February 2025 acquisition offer—a staggering $97.375 billion proposal for its core assets—as a calculated ploy to destabilize the company as it explores evolving its capped-profit structure into a Public Benefit Corporation (PBC). The filing claims the bid lacked financial substantiation and was critiqued by one involved investor as primarily aimed at “discovery,” referring to legal tactics to unearth sensitive data during litigation.
The countersuit centers on two key charges: Unfair competition under California law, alleging Musk and xAI executed a fraudulent “sham bid” to distort labor and investment flows toward their own platform, and Tortious interference with prospective economic advantage, accusing the Musk camp of sabotaging OpenAI’s relationships with stakeholders to tilt AGI’s future toward xAI’s objectives. OpenAI argues the campaign has diverted critical internal resources and “threatens irreparable harm” to its governance model and ethical mission, particularly while navigating tightrope federal scrutiny and mounting corporate partnerships.
The escalation comes amid reports that xAI’s Grok, its flagship AI system, has faced criticism for outputting harmful content—a point OpenAI highlights to contrast with its own safety-focused development ethos. With billions in venture capital on the line and AGI’s commercial blueprint still taking shape, this legal showdown risks setting precedents that could redefine control, ethics, and innovation in AI’s next era.
Original article, Author: Samuel Thompson. If you wish to reprint this article, please indicate the source:https://aicnbc.com/272.html
