Lawyers representing tech mogul Elon Musk have sought a preliminary injunction against OpenAI, several of its co-founders, and its primary backer Microsoft, to halt alleged anti-competitive practices by the defendants, including those named in the legal action.
The request for a temporary restraining order, filed hastily on Friday evening in the United States, seeks to forestall an imminent action or decision. The Northern District of California’s District Courtroom accuses OpenAI, its CEO Sam Altman, President Greg Brockman, Microsoft, LinkedIn co-founder and former OpenAI board member Reid Hoffman, and former OpenAI board member and Microsoft VP Dee Templeton of various illicit actions, seeking to halt them. The allegations embrace:
- Preventing potential customers from exploring alternatives to OpenAI by dissuading them from supporting rival AI companies, such as Elon Musk’s xAI?
- Gaining an unfair advantage by leveraging OpenAI’s relationships with Microsoft to access proprietary market insights and sensitive business information.
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Transferring all assets, including intellectual property owned, held, or managed by OpenAI, Inc. and its subsidiaries or affiliates to a for-profit governance structure.
- Engaging OpenAI in business partnerships with entities that have a legitimate financial stake or material interest.
Attorneys for Elon Musk argue that irreparable harm would likely result if an injunction is not issued to prevent Tesla’s CEO from selling his remaining Twitter shares without court approval, citing potential damage to Musk’s reputation and financial stability.
“Petitioners and the broader public are seeking a temporary reprieve,” they stated in their submission. “The most effective measure to preserve OpenAI’s original non-profit purpose is to impose an injunction preventing self-serving actions.” By the time the court reaches its merits, the OpenAI promise made to Musk and the general public will likely have long since vanished.
In July, Elon Musk filed a lawsuit against OpenAI, claiming that the company had abandoned its original nonprofit mission to make the results of its AI research accessible to everyone, only for it to be delayed until late summer. In November, the lawsuit expanded to include new defendants alongside Microsoft, Hoffman, and Templeton: Microsoft’s venture capitalist friends Shivon Zilis, a former OpenAI board member and executive at Neuralink, along with AI-focused plaintiff xAI.
Elon Musk has alleged that he was deceived out of more than $44 million, which he claims he contributed to OpenAI, citing concerns over the potential dangers and existential risks posed by artificial intelligence. Elon Musk, a co-founder of OpenAI, left the company in 2018 due to differences in vision and strategy.
Musk spearheaded the development of Explainable Artificial Intelligence (xAI) over the past year. Following the corporate’s launch of a flagship generative AI model, it now powers various features across Elon Musk’s social media platform, X – previously known as Twitter. XA AI also offers a robust API that empowers developers to seamlessly integrate Grok with external applications, platforms, and services.
Musk’s legal team asserts in their motion for injunctive relief that OpenAI is stifling xAI’s financial prospects by compelling potential investors to provide guarantees against funding the company and its rivals. In October, The Monetary Times reported that OpenAI instructed its investors to refrain from further financing any of its competitors, including X.ai.
“Counsel for Elon Musk confirms that at least one major investor who participated in OpenAI’s October fundraising round has since withdrawn their support from xAI.”
In reality, xAI has experienced seamless growth in generating revenue lately. The startup recently concluded a historic $5 billion funding round, boasting a prestigious investor roster that includes Andreessen Horowitz and Constancy among others. With a staggering $11 billion in its coffers, xAI is arguably the most well-capitalized AI endeavor on Earth.
Elon Musk’s motion for an injunction further claims that Microsoft and OpenAI continue to illegally share proprietary information and resources, and alleges that certain defendants, including Sam Altman, are engaging in self-serving actions that harm market rivals. OpenAI selected Stripe, a payment platform, where co-founder Altman holds material monetary interests, serving as the company’s payment processor. It’s reported that Altman amassed a substantial fortune from his holdings in Stripe.
Microsoft, which initially partnered with OpenAI in early 2019, has significantly expanded its collaboration in recent years, committing approximately $13 billion in exchange for a 49% stake in the company’s profits. Under the partnership, Microsoft has granted OpenAI extensive access to its cloud infrastructure, empowering the startup to train, fine-tune, and deploy AI models like those that power.
As a member of the boards for both Microsoft and OpenAI, while also serving as an associate at Greylock, Peter Hoffman’s unique vantage point allowed him to gain insight into the inner workings of the companies, Musk’s legal team contends. In 2023, Hoffman resigned from OpenAI’s board. Concerning Templeton, who held a nonvoting board observer role at OpenAI briefly under Microsoft’s tenure, Musk’s legal counsel contends that she enabled agreements between Microsoft and OpenAI that contravene antitrust regulations.
“Safeguarding OpenAI’s charitable status until a final determination, while also preventing further self-serving transactions by Altman, ensures the integrity of both the organization’s founding mission and the public’s trust in the responsible management of charities.”
Musk’s counsel argued that if an injunction is not issued, OpenAI might “run short of funds” to cover potential damages should the court ultimately side with him. OpenAI is hemorrhaging more than $5 billion in losses and remains far from achieving profitability. If a decision were made to prohibit its nonprofit transition, it would be “practically impossible” to unwind the company’s transactions without causing widespread investor losses should OpenAI continue to accept new investments.
“No impartial observer can gaze upon OpenAI today without acknowledging that it bears scant similarity to its original promise,” attorneys for Musk argued. The court respectfully requests a suspension of the defendants’ deteriorating behaviour until final judgement is reached.
OpenAI declined to comment on the matter, failing to promptly respond to TechCrunch’s inquiry. The corporation had previously moved to dismiss Musk’s lawsuit, labeling it as meritless and founded on bluster.
