OpenAI has responded forcefully to a recent lawsuit filed by Elon Musk, the CEO of Tesla Inc. and xAI, which raises questions about the company's transition from a nonprofit to a for-profit hybrid structure. On Friday, OpenAI issued a detailed statement clarifying that Musk had initially supported moving toward a for-profit model, a structure OpenAI currently operates under, but later left the organization following disagreements over control, rather than due to a divergence in the company’s mission.
In a comprehensive blog release, OpenAI explained that Musk's legal claims appear to selectively highlight certain internal documents, thereby misrepresenting the true narrative surrounding the company’s development and the adoption of a for-profit entity alongside its nonprofit arm. The company underscored that as early as 2017, Musk agreed on the necessity of introducing a for-profit entity to effectively pursue the long-term goal of developing artificial general intelligence (AGI).
Internal call transcripts and private journal entries, according to OpenAI, demonstrate Musk's engagement in discussions about transitioning from a purely nonprofit operation to one that could attract billions in investment capital while still adhering to a philanthropic mission. The statement from OpenAI reads: "The truth is that we and Elon agreed in 2017 that a for-profit structure would be the next phase for OpenAI." Additionally, Musk is noted to have considered setting up a public benefit corporation (PBC) shortly after these initial conversations.
OpenAI asserts that the current lawsuit oversimplifies and distorts this collaborative history by focusing on excerpts that suggest OpenAI's leadership pursued a for-profit strategy covertly and without Musk's consent. By contrast, OpenAI argues that the dispute ultimately arose from Musk’s insistence on obtaining majority ownership and exclusive operational control.
The company shared internal notes highlighting Musk’s demands for governance authority, citing his previous experiences that motivated his push for full control. OpenAI recounted that Musk even proposed merging OpenAI with Tesla, an idea the organization firmly rejected. This impasse, according to OpenAI, culminated in Musk’s departure from the company in 2018 because OpenAI was unwilling to surrender AGI's control to any individual exclusively, including Musk.
Echoing OpenAI’s narrative, CEO Sam Altman took to social media platform X to criticize Musk's lawsuit. Altman labeled Musk’s argument as selective, accusing him of "cherry-picking" material aimed at discrediting OpenAI President Greg Brockman. Altman explained that "The full story is that Elon was pushing for a new structure, and Greg and Ilya spent a lot of time trying to figure out if they could meet his demands."
In a subsequent post, Altman drew attention to internal documentation that reportedly indicates Musk sought a majority equity stake to fund his long-term vision, emphasizing the importance of this context to understanding the internal negotiations.
The lawsuit Musk filed, scheduled for trial on April 27, alleges that OpenAI abandoned its original nonprofit mission and deceived him during the transition to a for-profit enterprise, which includes the integration of Microsoft Corp as a key investor since 2019. This legal fact pattern is significant because Microsoft has invested billions into OpenAI’s operations.
Financial industry commentator Jim Cramer cautioned that the ongoing case could complicate OpenAI’s prospects for a future public offering. Predictive betting markets, such as Kalshi, currently assign Musk approximately a 64% probability of winning the suit.
OpenAI, however, argues that Musk’s lawsuit is a fourth successive attempt to relitigate prior claims and represents a broader effort by Musk to hamper OpenAI’s progress, coinciding with the growth of Musk’s own AI company, xAI.
Regarding stock performance, Microsoft (NASDAQ: MSFT) shows a continuing negative price trend over the short, medium, and long terms alongside low value and momentum rankings, as reported by Benzinga’s Edge Stock Rankings.
Key Points
- OpenAI asserts Elon Musk initially supported transitioning to a for-profit structure aligned with the company’s philanthropic goals.
- Musk’s departure in 2018 followed failed negotiations over majority ownership and operational control, not mission-related disagreements.
- OpenAI and CEO Sam Altman accuse Musk of selectively using internal documents to misrepresent company history.
- The ongoing lawsuit alleges OpenAI abandoned its nonprofit mission and misled Musk, complicating OpenAI’s potential public listing and investor relations.
Risks and Uncertainties
- The lawsuit’s outcome could significantly affect OpenAI’s business operations and strategies, particularly regarding governance and ownership.
- Possible legal and public relations challenges might impact Microsoft’s substantial investment in OpenAI.
- The dispute may influence investor confidence and the feasibility of OpenAI’s future initial public offering.
- The broader AI sector competition, evidenced by Musk’s xAI launching amid this legal battle, adds pressure and uncertainty to OpenAI’s positioning.
Disclosure
This article was produced with partial assistance from AI tools and underwent editorial review prior to publication.