OpenAI Countersues Elon Musk, Accuses Him of Power Grab

On Wednesday, OpenAI filed a countersuit against Elon Musk, accusing him of a sustained campaign to undermine the company over the past year.

The lawsuit highlights Musk's pattern of harassment and seeks a court order to prevent any further "unlawful and unfair actions" against OpenAI.

The case centers on the future structure of the company that played a pivotal role in launching the AI revolution.

OpenAI alleges that Musk has used legal claims, social media, and media attacks to disrupt its progress, all while advancing his own generative AI venture, xAI, which he founded in 2023.

In a 100-page filing submitted in response to Musk's ongoing lawsuit, OpenAI claims significant harm from Musk's actions and is demanding a jury trial:

"Through press attacks, malicious campaigns broadcast to Musk's more than 200 million followers on the social media platform he controls, a pretextual demand for corporate records, harassing legal claims, and a sham bid for OpenAI's assets, Musk has tried every tool available to harm OpenAI."

It added:

“Musk has engaged in these efforts to slow OpenAI’s progress and impair its ability to compete effectively in an increasingly crowded field, but also to seize and maintain for xAI an unearned edge designed to impair competition more broadly for the sole benefit of Musk’s xAI, at the expense of the public interest.”

The company has also called for Musk to be held accountable for the damages already caused. A jury trial is scheduled to begin next spring.

OpenAI Accused of Abandoning Founding Purpose and Accepting Billions

Musk and Sam Altman co-founded OpenAI in 2015, but Musk departed before the company became a leading force in AI technology.

Recently, Musk has sought to block OpenAI's transition to a for-profit model, which has led to the current legal dispute.

OpenAI needs to complete this transition by the end of the year to secure the full $40 billion in its ongoing fundraising round.

Musk's lawsuit, initiated last year, accuses OpenAI of betraying its original mission as a non-profit by accepting significant investments from Microsoft Corp. starting in 2019—just after Musk left the company's board.

Musk’s legal team also pointed to a $97.4 billion takeover bid from a consortium of investors led by Musk earlier this year, which OpenAI rejected.

Musk's lawyer Marc Toberoff said in a statement:

"Had OpenAI's Board genuinely considered the bid as they were obligated to do they would have seen how serious it was. It's telling that having to pay fair market value for OpenAI's assets allegedly 'interferes' with their business plans."

In its countersuit filed Wednesday, OpenAI described Musk's February buyout offer as a "sham bid," aimed at disrupting its fundraising efforts and damaging its relationships with investors and customers.

Altman rejected the offer outright, stating that the company was "not for sale," a stance supported by the board.

The bid, OpenAI argued, was a "very public effort" to inflate the nonprofit's valuation and had already caused confusion.

Adding a quirky twist, OpenAI's filing noted that the proposed purchase price of $97.4 billion was a nod to "974 Praf," a character from Iain Banks' science fiction series Look to Windward—a name Musk has also used for several SpaceX rockets.

OpenAI warned that pursuing this valuation further could severely hinder its mission, particularly if it continued to be affected by unlawful interference and harassment.

Altman and Musk Do Not See Eye-to-Eye

Last month, Musk's xAI acquired X in a deal that values the social media platform at $33 billion, enabling the value of his AI company to be shared with X’s co-investors.

This move follows Musk's lawsuit against OpenAI and Altman last year, accusing them of deviating from the organization's original mission: to develop AI for the betterment of humanity, rather than for corporate profit.