Elon Musk wants to prevent OpenAI from becoming a commercial organization through court

Billionaire Elon Musk, who was at the origins of the startup OpenAI, has long been criticizing its activities, and after he launched a competing company xAI, he is ready to defend his own interests in court. He recently attempted to accuse OpenAI of illegally limiting xAI’s access to capital.

Image source: OpenAI

This is the fourth lawsuit that Elon Musk’s representatives have filed in an American court. He was also joined by xAI executives and former OpenAI board member Shivon Zilis. The lawsuit, as CNBC explains, has two main goals: to prevent OpenAI from becoming a full-fledged commercial entity, and to prevent OpenAI from colluding with investors to keep them from funding other companies of this type, including xAI.

Let us remember that OpenAI, founded in 2015, was initially a non-profit organization, but the restructuring of 2019 introduced elements of commercial gain into the company’s goals and missions, which Musk later opposed, although he was no longer related to the startup. Now the non-profit part of OpenAI formally manages the commercial one, and this structure confuses investors who do not risk investing heavily in its capital because of this.

Musk does not like OpenAI’s desire to completely go commercial, as well as to introduce a Microsoft representative to the board of directors. The latter is OpenAI’s largest investor, but Musk doesn’t like the alliance because he believes both companies will be able to abuse the competitive advantage gained by early access to information critical to successful development in the AI ​​market. In mid-November, Musk’s legal representatives also accused OpenAI of trying to prevent its potential investors from investing in xAI capital.

Representatives of OpenAI noted that “Elon’s fourth attempt (to sue OpenAI) reuses the same baseless accusations.” Musk’s own startup xAI was founded in July 2023 and has already reached a capitalization of $50 billion. This is less than the $157 billion attributed to OpenAI, but the growth rate of capitalization of Elon Musk’s youngest company is impressive. The billionaire’s lawyers said in their lawsuit against OpenAI that the company “cannot clutter the market like a Frankenstein of different corporate forms that ultimately serve Microsoft’s financial interests.”

The merging of OpenAI and Microsoft through the introduction of a post on the board of directors of the first company, which will be held by a representative of the second, also alarms American antitrust regulators, so not only Elon Musk is expressing concern about this phenomenon. Microsoft itself has already invested about $14 billion in OpenAI, but so far this line of activity has brought it only losses.