Synopsis
Elon Musk is suing OpenAI, alleging the AI company abandoned its nonprofit mission for profit. He claims he was misled about the shift to a commercial model, which he views as a "bait and switch." Musk seeks to return OpenAI to its original purpose and remove current leadership.Listen to this article in summarized format
The Tesla and SpaceX chief is suing OpenAI, its CEO Sam Altman, and president Greg Brockman. He claims they misled him and the public by shifting from a nonprofit mission to a commercial model.
At the centre of the case is Musk’s assertion that OpenAI was meant to function like a charity.
“If we make it OK to loot a charity, the entire foundation of charitable giving in America will be destroyed,” Musk told the court.
‘I created OpenAI’
Musk portrayed himself as the driving force behind OpenAI’s early days.
“I came up with the idea, the name, recruited the key people, taught them everything I know, provided all of the initial funding,” he testified.
He said he helped bring in key talent such as Ilya Sutskever and used his connections to secure crucial partnerships. According to Musk, his personal connections with Microsoft CEO Satya Nadella and Nvidia CEO Jensen Huang helped OpenAI gain computing power in its early phase.
He also described a fallout with Google cofounder Larry Page over AI safety, saying their disagreements partly motivated the creation of OpenAI as a counterbalance.
The ‘bait and switch’ claim
A major flashpoint in the trial is OpenAI’s transition to a for-profit structure.
Musk said he felt misled when Microsoft invested billions into OpenAI.
Jurors were shown text messages in which Musk called the move a “bait and switch”. Musk said Altman, back then, agreed it “feels bad”, and then offered him the opportunity to buy stock in OpenAI. Musk testified that “frankly, it felt like a bribe.”
Musk argues that the shift violated the organisation’s founding principles. He is seeking up to $150 billion in damages, though he says any payout would go to OpenAI’s charitable arm.
He also wants the company to return to a nonprofit model and for Altman and Brockman to be removed from leadership roles.
OpenAI hits back
Lawyers for OpenAI strongly dispute Musk’s claims.
Their lead counsel, William Savitt, argued that Musk himself supported the idea of making OpenAI a for-profit entity at one stage and later became resentful after losing influence.
“What he cares about is Elon Musk being on top,” Savitt told the court.
OpenAI maintains that creating a commercial arm in 2019 was necessary to fund expensive AI development and compete with rivals such as Google’s DeepMind.
The company also says its nonprofit arm still retains control over the organisation.
Tense exchanges in court
The courtroom also saw several heated moments. Musk repeatedly clashed with Savitt during cross-examination, accusing him of asking misleading questions.
“Your questions are not simple. They're designed to trick me,” Musk said.
At another point, he complained: “Few answers are going to be complete, especially when you cut me off all the time.”
Judge Yvonne Gonzalez Rogers occasionally intervened, urging both sides to keep proceedings focused. She also limited discussions around AI extinction risks, saying the trial was not about the broader dangers of AI.
AI safety and contradictions
AI safety has been a recurring theme in the trial. Musk has long warned about the risks of advanced AI, telling the court: “We all could die.”
However, OpenAI’s lawyers argue that safety was not a priority for Musk during his time with the company. They also highlighted what they see as a contradiction: Musk now runs his own AI venture, xAI.
Musk defended this, saying that for-profit companies can still be socially beneficial. He also spoke about using OpenAI systems to train xAI models, saying it is standard practice to use other AI systems to validate your own AI.
Stakes for the AI industry
The outcome of the trial could have far-reaching implications.
OpenAI is currently valued at around $850 billion and is reportedly preparing for a potential IPO that could push its valuation to $1 trillion, according to Reuters. However, its unusual structure, where a nonprofit controls a for-profit arm, has raised concerns among investors.
A ruling in Musk’s favour could force major changes to OpenAI’s governance and business model.
Background: From nonprofit to AI giant
OpenAI was founded in 2015 by Musk, Altman and others as a nonprofit research lab aimed at developing AI for the benefit of humanity.
Musk invested about $38 million before leaving the board in 2018. A year later, OpenAI created a for-profit subsidiary to raise capital.
Since then, the company has grown rapidly, fuelled by massive investments from Microsoft and the global success of ChatGPT.
Musk, meanwhile, launched his own AI company, xAI, in 2023.
The trial, expected to run for several weeks, will determine whether OpenAI broke its original “promises”, or simply evolved to survive in a costly and competitive industry.
