In a blow that’s sent shockwaves through the tech world, Elon Musk has filed a 46-page lawsuit against OpenAI. He alleges the non-profit research lab has strayed from its founding agreement by pursuing profit-driven ventures.
Musk further claims that GPT-4, a powerful language model developed by OpenAI, meets the criteria for artificial general intelligence (AGI) as defined in the agreement. Based on this, he demands OpenAI return to its original commitment of open-source development.
According to Axios, OpenAI has firmly denied Musk’s accusations in an internal memo to staff. Notably, CEO Sam Altman acknowledged in a separate statement that “this year will be a tough one for the company.”
Musk’s 46-page Lawsuit
Musk’s 46-page, over 13,000-word lawsuit provides a detailed history of OpenAI, including its complex corporate structure, emails between Musk and Altman from around 2015, and more.
Click to view the full lawsuit document!
Musk’s five main accusations are:
1. Breach of Contract
Musk claims that from OpenAI’s founding in 2015 to September 2020, he not only invested tens of millions of dollars but also provided key guidance on research direction and played a critical role in recruiting top talent. He did this, he says, because the founding agreement clearly stated:
- OpenAI would develop AGI as a non-profit organization, serving human well-being rather than pursuing shareholder profits.
- OpenAI would remain open source, balancing safety considerations without closing off technology for commercial patent reasons.
This agreement is documented in OpenAI’s founding agreement and in years of written communication between Musk and the defendants.
Musk claims the defendants violated the founding agreement in multiple ways, including:
- Granting Microsoft exclusive rights to GPT-4, which could be considered an early version of AGI, despite the original commitment to developing AGI for the benefit of humanity rather than private commercial interests.
- Failing to disclose details of GPT-4 to the public and erecting a paywall, contrary to the commitment to open-source technology, and sharing commercial profits with Microsoft.
- Allowing Microsoft, a for-profit company, to have a seat on OpenAI’s board and exert undue influence and control over OpenAI’s non-profit activities, including deciding the level of openness of OpenAI’s technology and assessing whether OpenAI has achieved AGI.
Musk claims to have suffered damages due to OpenAI’s breach of contract, exceeding the court’s jurisdictional threshold of $35,000. The specific amount will be determined at trial.
2. Promissory Estoppel
Musk further claims that the defendants repeatedly made promises, including in writing, to “induce” him to invest millions of dollars and significant time and resources into OpenAI over many years.
Based on the defendants’ promises, Musk invested heavily in OpenAI. However, OpenAI later abandoned its non-profit mission, which contradicted the promises Musk received.
Musk’s claims are:
- To rectify this injustice by enforcing the defendants’ promises.
- If specific performance is not available, the defendants should at least compensate the plaintiff for his lost investment and the losses of the third-party beneficiaries expected in the founding agreement. The amount is currently unknown but far exceeds the court’s minimum jurisdictional limit of $35,000. If necessary, it will be proven at trial.
3. Breach of Fiduciary Duty
According to California law, the defendants have a fiduciary duty to the plaintiff, including the obligation to use the plaintiff’s funds for their designated purpose. The defendants’ use of the funds provided and the resulting intellectual property and derivatives for commercial purposes violates this principle and they should specifically fulfill their contractual obligations.
4. Unfair Business Practices
The defendants solicited donations from the plaintiff and others under false pretenses and used them for purposes other than those originally intended, constituting unfair competition and other unfair business practices.
Musk claims he has the right to demand that the defendants return all funds obtained through such conduct and/or disgorge those funds, and seek an injunction prohibiting the defendants from engaging in such conduct in the future, and require the defendants to specifically fulfill their obligations.
5. Accounting
The defendants have financial information related to the plaintiff’s and others’ grants to OpenAI and the use of the intellectual property and derivatives of those funds. The plaintiff cannot currently determine his interest in the use, allocation, or distribution of the assets, and requests an accounting audit.
Interesting Details
Many netizens were surprised to learn that OpenAI is actually a series of shell structures involving “8 OpenAI” entities. Musk clearly listed the founding time, members, and other details of these companies in the lawsuit.
In response to the netizens’ surprise, Musk quipped that this is the “Shell game, corporate edition.”
In the lawsuit, Musk further argues that the new board of directors, hand-picked by Altman, lacks sufficient AI expertise compared to the previous board. He claims they are not qualified to “independently judge whether and when AGI has been achieved, and when under the agreement, Microsoft should be excluded.”
One More Thing
Jimmy Apples, a well-known OpenAI leak account (who accurately predicted the Sora release date two days in advance), has shared some recent news. According to him, OpenAI originally planned to update models and Q* before the official release of GPT-5. However, with the lawsuit, everything is on hold until legal approval is granted.
Jimmy Apples implies that he’ll have some free time to play games this weekend, suggesting no major releases are coming soon.
Therefore, regardless of the lawsuit’s outcome, Musk’s move has objectively slowed down OpenAI’s progress. While internal research won’t stop, both other tech companies and the general public worldwide have more time to prepare for the next generation of AI models.
Click to view the full lawsuit document!