Why Elon Musk Is Suing OpenAI and Sam Altman

The fallout from the OpenAI board’s failed attempt to fire CEO Sam Altman last November took an unexpected turn on Thursday, in events that could have a significant bearing on the future of the company and the wider world of artificial intelligence.

Elon Musk filed a lawsuit against OpenAI in a San Francisco court, alleging that Altman and co-founder Greg Brockman have violated OpenAI’s founding mission to develop AI safely and for the benefit of humanity.

The billionaire owner of SpaceX and X (formerly Twitter) co-founded OpenAI alongside Altman and Brockman back in 2015, but stepped away from the company in 2018. (Musk launched his own AI company, xAI last summer.) Musk disagreed with Altman and Brockman’s plan to turn OpenAI from a non-profit to a for-profit company, and before stepping down, reportedly mounted an unsuccessful bid to install himself as CEO. Musk is suing Altman, Brockman, and several of OpenAI’s business entities for breach of contract, breach of fiduciary duty, and unfair business practices, seeking unspecified damages above $105,000.

Read More: Inside Elon Musk’s Struggle for the Future of AI

The lawsuit, however, also makes a more substantial claim which—if upheld by the San Francisco Superior Court—could fundamentally reshape how OpenAI and its partner Microsoft do Business. (Microsoft has invested $13 billion in OpenAI.)

First, the crucial context: As part of their partnership agreement, Microsoft has exclusive commercial rights to OpenAI’s intellectual property, including the algorithms behind ChatGPT and its successor GPT-4. But there is a notable caveat: these commercial rights only apply to “pre-AGI Technology.” And it is OpenAI’s board that has the right to determine when AGI—artificial general intelligence, or an AI system that can perform economically valuable tasks similar to a human—has been reached.

In November 2023, the OpenAI board fired Altman. During the five days that followed, Microsoft and OpenAI employees applied significant pressure to the board to reverse that decision, ultimately successfully. Altman returned as CEO, and all but one of the board’s members who had voted to oust Altman were themselves removed. (Altman and Brockman were also removed from the board.) Microsoft, which did not previously have a seat on the board, was given an observer position with no voting power. These events, Musk’s lawsuit alleges, amounted to a “coup” that had the effect of ensuring the new OpenAI board, which the suit argues were “handpicked by Mr. Altman and Microsoft,” would be unlikely to declare that AGI had been reached, thus allowing Microsoft to continue profiting from the Technology.

“To this day, OpenAI, Inc.’s website continues to profess that its charter is to ensure that AGI ‘benefits all of humanity,’” the lawsuit states. “In reality, however, OpenAI, Inc. has been transformed into a closed-source de facto subsidiary of the largest Technology company in the world: Microsoft. Under its new Board, it is not just developing but is actually refining an AGI to maximize profits for Microsoft, rather than for the benefit of humanity.”

OpenAI did not immediately respond to a request for comment. The board’s new chair, Bret Taylor, said in a statement in November that the new board would “build a qualified, diverse Board of exceptional individuals” focused on serving OpenAI’s mission. Responding to similar claims made by Musk in the past, Altman said last year: “I like the dude. I think he’s totally wrong about this stuff… He can say whatever he wants but I’m proud of what we’re doing, and I think we’re going to make a positive contribution to the world, and I try to stay above all that.”

Read More: CEO of the Year 2023: Sam Altman

Musk’s lawsuit seeks “a judicial determination that GPT-4 constitutes Artificial General Intelligence and is thereby outside the scope of OpenAI’s license to Microsoft,” citing a paper authored by Microsoft researchers who claim the tool is “an early (yet still incomplete) version of an AGI system.” It also seeks a court order prohibiting OpenAI from using its assets “for the financial benefit” of Microsoft or itself, and a separate court order compelling OpenAI to release its Technology to the public.

Musk, the lawsuit separately argues, was the driving force behind the establishment of OpenAI in 2015 as a nonprofit research body dedicated to building AGI for the benefit of humanity. He and Altman were concerned that Google, the leading AI lab at the time, was not prioritizing the safety of the technology. Musk donated $44 million, the majority of the cash required to get OpenAI off the ground, according to the lawsuit, and helped the nonprofit recruit leading AI researchers.

“Imagine donating to a non-profit whose asserted mission is to protect the Amazon rainforest, but then the non-profit creates a for-profit Amazonian logging company that uses the fruits of the donations to clear the rainforest,” the lawsuit says. “That is the story of OpenAI.”