Musk accuses OpenAI of undermining competition through investor restrictions.
Microsoft’s $13B funding of OpenAI raises conflict of interest concerns.
xAI struggles with funding as Musk alleges market manipulation by rivals.
Elon Musk has initiated legal action against OpenAI and Microsoft, accusing them of engaging in anti-competitive practices that he claims are detrimental to the broader AI industry.
The class-action lawsuit, filed in the U.S. District Court for the Northern District of California, alleges that the two companies have leveraged their dominance to stifle competition, particularly Musk’s AI venture, xAI.
The lawsuit asserts that OpenAI, initially founded as a nonprofit organization with a mission to promote the safe development of AI for the public good, has shifted its governance to a for-profit model.
Musk’s legal team contends this change undermines the original vision and creates an uneven playing field for other AI ventures.
The filing highlights instances where OpenAI allegedly pressured investors to avoid funding competing AI companies, including xAI.
Microsoft, a key financial backer of OpenAI, is also named in the lawsuit. Musk’s legal team claims that Microsoft’s $13 billion investment in OpenAI has allowed it to gain substantial influence over the AI company’s operations and assets.
The lawsuit alleges that Microsoft has partnered with OpenAI to acquire valuable AI technologies, hosting them on its cloud infrastructure and potentially manipulating market dynamics to the detriment of competitors.
According to the complaint, OpenAI has also faced criticism for potential conflicts of interest. It points to the financial relationship between OpenAI CEO Sam Altman and Stripe, the payment processor used by OpenAI. Musk’s attorneys argue this connection could compromise decision-making and hinder fair competition in the AI sector.
xAI, founded by Musk last year, has faced challenges in securing funding, a situation Musk attributes to OpenAI’s alleged market manipulation.
Despite these hurdles, xAI recently announced a $5 billion funding round with support from major firms such as Andreessen Horowitz and Fidelity. Musk’s team argues that OpenAI’s practices have created unnecessary barriers to xAI’s growth.
The legal filing also details OpenAI’s recent actions, including a $1.5 billion tender offer allowing employees to sell shares to SoftBank, which now holds a significant stake.
Musk’s attorneys contend that such moves further distance OpenAI from its nonprofit roots, prioritizing financial gains over its foundational principles.