Musk’s amended lawsuit against OpenAI names Microsoft as defendant

Elon Musk’s lawsuit against OpenAI accusing the company of abandoning its non-profit mission was withdrawn in July, only to be revived in August. Now, in an amended complaint, the suit names new defendants including Microsoft, LinkedIn co-founder Reid Hoffman, and former OpenAI board member and Microsoft VP Dee Templeton.

The amended filing also adds new plaintiffs: Neuralink exec and ex-OpenAI board member Shivon Zilis and Musk’s AI company, xAI.

Musk was one of the original founders of OpenAI, which was meant to research and develop AI for the benefit of humanity, and was established as a non-profit originally. He left the company in 2018 after disagreements about its direction.

In the complaint, lawyers for Musk argue that OpenAI is now “actively trying to eliminate competitors” such as xAI by “extracting promises from investors not to fund them.” It’s also allegedly unfairly benefitting from Microsoft’s infrastructure and expertise in what Musk’s counsel describes in the filing as a “de facto merger.”

“xAI has been harmed by, without limitation … an inability to obtain compute from Microsoft on terms anywhere near as favorable as OpenAI receives … and the exclusive exchange between OpenAI and Microsoft of competitively sensitive information,” reads the complaint, filed late Thursday in federal court in Oakland, California.

Hoffman’s position on the boards of both Microsoft and OpenAI while also a partner at Greylock, the investment firm, gave Hoffman a privileged — and illicit — view into the companies’ dealings, the complaint alleges. (Hoffman stepped down from OpenAI’s board in 2023.) Greylock invested in Inflection, Musk’s counsel notes, the AI startup that Microsoft acqui-hired earlier this year — and which could reasonably be considered an OpenAI competitor, according to the complaint.

As for Templeton, whom Microsoft briefly appointed as a non-voting board observer at OpenAI, the amended filing alleges that she was in a position to facilitate agreements between Microsoft and OpenAI that would violate antitrust rules.

“The purpose of the prohibition on interlocking directorates is to prevent sharing of competitively sensitive information in violation of antitrust laws and/or providing a forum for the coordination of other anticompetitive activity,” the complaint reads. “Allowing Templeton and Hoffman to serve as members of OpenAI’s …. board undermined this purpose. “

Alongside Microsoft, Hoffman, and Templeton, California attorney general Rob Bonta is named as a defendant in Musk’s complaint. Bloomberg reported this month that OpenAI is in talks with Bonta’s office over the process to change its corporate structure.

Per the amended complaint, Zilis, who stepped down from OpenAI’s board in 2023 after serving as a member for roughly four years, has standing as an “injured employee” under California Corporations Code. Zilis repeatedly raised concerns over OpenAI’s dealmaking internally that fell on deaf ears — concerns substantially similar to Musk’s, according to the complaint.

Zilis has close ties to Musk, having worked as a project director at Tesla from 2017 to 2019 in addition to directing Neuralink research. (Neuralink is Musk’s brain-computer interface venture.) She’s also the mother of three of Musk’s children, Techno Mechanicus and twins Strider and Azure.

The 107-page amended complaint includes the unusual detail that OpenAI CEO Sam Altman proposed that OpenAI sell its own cryptocurrency in January 2018, before it ultimately decided to transition to a capped-profit structure.

“Heads up, spoke to some of the safety team and there were a lot of concerns about the ICO and possible unintended effects in the future,” Altman wrote in an email to Musk dated January 21, 2018, an exhibit filed with the amended complaint shows. An ICO, or initial coin offering, is an unregulated means by which funds are raised for cryptocurrency businesses. “Going to emphasize the need to keep this confidential, but I think it’s really important we get buy-in and give people the chance to weigh in early.”

Image Credits:Toberoff & Associates

Musk supposedly shot down the crypto sale idea. “I have considered the ICO approach and will not support it,” he wrote in an email reply to Altman and OpenAI co-founders Greg Brockman (now OpenAI’s president) and Ilya Sutskever (OpenAI’s ex-chief scientist), shows an exhibit. “In my opinion, that would simply result in a massive loss of credibility for OpenAI and everyone associated with the ICO.”

The thrust of the lawsuit remains the same on the plaintiffs’ side: that OpenAI profited from Musk’s early involvement in the company yet reneged on its nonprofit pledge to make the fruits of its AI research available to all. “No amount of clever drafting nor surfeit of creative dealmaking can obscure what is happening here,” reads the complaint. “OpenAI, Inc., co-founded by Musk as an independent charity committed to safety and transparency … [is] fast becoming a full for-profit subsidiary of Microsoft.”

OpenAI has sought to dismiss Musk’s lawsuit, calling it “blusterous” and baseless.