OpenAI is pushing back against Elon Musk's latest attempt to rework his lawsuit against the artificial intelligence (AI) giant that seeks to prevent the company from moving to a for-profit structure, noting in a blog post and legal filing that Musk had argued for it to do so years ago.
Musk, who co-founded OpenAI in 2015 along with company CEO Sam Altman, Ilya Sutskever, Greg Brockman and others, split from the company in early 2018 after failing to secure control over the company as its majority shareholder and CEO and later attempting to convince its founders to merge it with Tesla. Musk founded xAI, a competitor to OpenAI, in March 2023.
In March 2024, Musk filed a lawsuit against OpenAI that argued it breached its founding mission as a not-for-profit company by creating a for-profit structure. OpenAI has pushed back on that lawsuit, which was withdrawn and refiled over the summer, and outlined Musk's past agreement with a for-profit structure in a new blog post and legal filing.
OpenAI noted that in email conversations with other co-founders, Elon Musk questioned whether there should be a nonprofit structure before the company was announced in November 2015 and wrote in an email that the "structure doesn't seem optimal … Probably better to have a standard C corp with a parallel nonprofit."
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In July 2017, Musk and the OpenAI founders were discussing the company's next steps and a message from Brockman to Zilis, who was acting as a liaison between Musk and OpenAI, detailing notes from a meeting with Musk in which they discussed OpenAI potentially changing the structure to for-profit.
Brockman said in the message the meeting with Musk "turned into talking about structure (he said non-profit was def the right one early on, may not be the right one now – ilya and I agree with this for a number of reasons)."
Progress made in advancing OpenAI's technology in August 2017 prompted Musk to suggest that it was "time to make the next step for OpenAI. This is the triggering event." It was a reference to an email from Brockman that suggested an OpenAI for-profit would launch in 2018.
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FOX Business learned from OpenAI's legal team that Musk then instructed his wealth manager in September 2017 to create a public benefit corporation called Open Artificial Intelligence Technologies Inc., which spurred negotiations about ownership terms.
Musk insisted on having majority equity and board control and serving as CEO. When the other co-founders declined those terms, Musk said discussions were over.
In January 2018, Musk said, "OpenAI is on a path of certain failure relative to Google," and he suggested the company be acquired by Tesla. However, the OpenAI team opted against doing so, and the two sides were unable to agree on a path forward.
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Musk resigned from the company's board in February 2018 after hosting a goodbye meeting, saying he would pursue AI development at Tesla. He also told OpenAI it needed to raise "billions per year immediately" in December 2018 or else it had no chance of being relevant in the AI race with Google's DeepMind unit.
OpenAI publicly launched its capped-profit entity, which is governed by the nonprofit, in March 2019. The company shared an advance copy of the announcement with Musk, who replied, "Please be explicit that I have no financial interest in the for-profit arm of OpenAI."
The company's founders also offered Musk equity in the capped-profit entity multiple times over the years, which Musk has declined.
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OpenAI emerged as a leader in the development of generative AI with its launch of ChatGPT in November 2022. It has since secured significant investment from Microsoft and other entities.
XAI has raised billions of dollars since its launch early in 2023 and has launched AI models that aim to compete with ChatGPT.
Musk withdrew his initial lawsuit against OpenAI from March 2024 in June but filed a new complaint in August.
