Elon Musk has re-opened his legal battle with OpenAI and its CEO Sam Altman. On Monday, Musk filed a new lawsuit in federal court in Northern California, targeting not only Altman but also co-founder Gregory Brockman. The lawsuit accuses the company of betraying its original nonprofit mission and engaging in racketeering activities. In his lawsuit, Musk accuses Sam Altman of self-dealing and mismanagement, alleging that Altman prioritized personal profit over the organization’s mission.
The lawsuit accuses Altman of engaging in self-dealing, deliberately withholding key information, and misrepresenting his personal holdings and investments. It cites a June 2024 Wall Street Journal report claiming that Altman induced OpenAI to partner with Reddit, despite holding a significant stake in the company. Following the announcement of the deal, Reddit’s stock surged, allegedly boosting Altman’s stake by $69 million.
Conflict of Interest and Self-Dealing Accusations
Additionally, the lawsuit alleges that Altman misrepresented his role as an independent board member of the OpenAI Startup Fund while secretly owning the fund. He is also accused of orchestrating a $51 million AI chip deal with Rain AI, a company in which he held a significant interest. Furthermore, the lawsuit suggests that Altman and former Apple chief design officer Jony Ive have launched their own AI device company, planning to exploit OpenAI’s technology to compete with Apple.
Musk, who co-founded OpenAI in 2015, previously sued the company in February 2024. That lawsuit accused OpenAI of abandoning its original goals by reserving its most advanced AI technologies for private customers. The February lawsuit was dropped in June after OpenAI published old emails from Musk that seemed to undermine his claims.
Allegations of Racketeering and Deception
The lawsuit goes further than the initial filing by accusing OpenAI of racketeering. Marc Toberoff, Musk’s attorney, issued a statement saying the lawsuit aims to expose what he calls “Defendants’ hot-air philanthropy” and holds them accountable for misrepresentations to Musk and the public. Toberoff emphasized that the case involves more than just a $100 billion startup, it concerns the future of artificial general intelligence (AGI).
The lawsuit portrays Musk as being “betrayed by Altman and his accomplices,” describing the situation as one of “Shakespearean proportions.” It also touches on a leadership crisis at OpenAI last year when Altman was briefly ousted as CEO, only to be quickly reinstated with Microsoft gaining a non-voting seat on OpenAI’s board. Microsoft, a significant investor in OpenAI, later relinquished this seat in July following regulatory scrutiny in Europe, the UK, and the US.
The 83-page document claims that OpenAI’s partnership with Microsoft fundamentally changed the company’s mission. According to the lawsuit, Musk accuses Sam Altman of self-dealing and mismanagement by manipulating OpenAI’s board to secure favorable deals for himself.
Musk Accuses OpenAI of Secretly Pursuing Profit
In recent legal developments, Musk accuses Sam Altman of self-dealing and mismanagement, focusing on Altman’s role in diverting nonprofit resources for personal gain. Elon Musk has accused OpenAI executives of covertly pursuing profit after he rejected their proposal to transform the nonprofit into a for-profit venture in 2017. According to the new lawsuit, after Musk declined the idea, the defendants devised a strategic plan to achieve their goals more subtly.
The lawsuit claims that Sam Altman, appointed as OpenAI’s CEO in 2019, led the charge in forming a series of for-profit entities. Altman, along with other defendants, is said to have played a significant role in establishing these for-profit companies.
The lawsuit details how Altman announced the creation of OpenAI, L.P. in March 2019. This entity was described as a “capped-profit company” where investors could earn a limited return on their investments. This structure was later converted to OpenAI OpCo, LLC in January 2023. Several other entities, such as OpenAI, LLC, OpenAI Global, LLC, and OAI Corporation, LLC, were also formed between 2020 and 2023, all contributing to what the lawsuit describes as an intricate web of for-profit affiliates.
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