On Friday, OpenAI released a series of internal emails, text messages, and legal filings, indicating that Elon Musk’s injunction to prevent OpenAI from turning into a ‘for-profit’ company was contrary to his vision in 2017.
Musk, CEO of Tesla and SpaceX, was an early investor in OpenAI. In March 2024, he initiated legal proceedings against the company, alleging they never intended to go ‘for profit’.
The documents and email exchanges between co-founders Sam Altman, Ilya Sutskever, Greg Brockman, and Elon Musk regarding the operational structure of the company show that Musk ‘wanted an OpenAI ‘for-profit’ model.
OpenAI said that in the summer of 2017, “We and Elon agreed that a for-profit was the next step for OpenAI to advance the mission.” The company further said that Musk had demanded majority equity, absolute control, and be CEO of the for-profit initiative.
OpenAI rose to prominence with ChatGPT and other innovative products, forcing the tech world to be on edge in the fast-changing AI world. The company began as a non-profit in 2015. By 2019, it adopted a “capped-profit” model to attract investment, allowing investors to earn returns up to a set limit, with any surplus directed back to the non-profit.
By 2024, OpenAI proposed restructuring into a public benefit corporation to secure more substantial funding for its AI research and development. A few months ago, OpenAI raised $6.6 billion in funds, led by Thrive Captial, NVIDIA, Microsoft and Softbank Group.
While the intent of releasing these documents is not clear, the timing, however, begs the question, as a preliminary court hearing between Musk and OpenAI is scheduled early next year, on January 14, 2025.
Revealing the timeline of events since its inception in 2015, these documents, however, suggest that Musk was advocating for a financially efficient structure compared to a non-profit model.
While OpenAI mentioned that they came close to accepting Musk’s terms, they later felt he did not align with the company’s mission. OpenAI told Musk, “The goal of OpenAI is to make the future good and to avoid an AGI dictatorship.”
Not just Musk, OpenAI has been facing attacks from all sides. Tech giant Alphabet, which owns Google, OpenAI’s competitor, asked the Federal Trade Commission (FTC) to purge Microsoft’s partnership with OpenAI. The report suggests that companies that buy OpenAI’s technology may have to pay an additional cost if they do not use Microsoft’s servers to run it.
Timeline of events
- 2015: Musk questioned the non-profit nature of OpenAI. He said the ‘structure doesn’t seem optimal.’
- 2017: OpenAI allegedly agreed along with Musk that a ‘for-profit’ structure is the optimal solution. Musk reportedly later demanded full control and a majority stake, which OpenAI rejected.
- 2018: Musk resigned from the OpenAI’s Board. He suggested that OpenAI merge with Tesla.
- 2019: OpenAI announces capped-profit OpenAI LP.
- 2023: Musk founded xAI to compete against OpenAI.
- 2024 (March): Musk files a lawsuit against OpenAI, accusing them of abandoning the non-profit mission.
- 2024 (June): Musk withdraws his lawsuit against OpenAI.
- 2024 (August): Musk initiates the lawsuit against Sam Altman and Greg Brockman.
- 2024 (November): Musk expanded the lawsuit and included Microsoft. He accused their tie-ups as anticompetitive and monopolistic in nature.
‘You Can’t Sue Your Way to AGI’
While Musk withdrew his case in June 2024, he renewed it again in August. In November, he expanded the lawsuit by including Microsoft. He claimed they were engaging in anti-competitive and monopolistic practices in the AI ecosystem.
“You can’t sue your way to AGI. We have great respect for Elon’s accomplishments and gratitude for his early contributions to OpenAI, but he should be competing in the marketplace rather than the courtroom,” said OpenAI.
At present, while Altman has no stake in the company, reports suggest that he might receive some when the company completes the ‘for profit’ transition.
‘Meta is Team Musk’
Another report suggests that Meta is insisting California’s attorney general block OpenAI’s conversion to a for-profit company—jumping on board Elon Musk’s team.
Meta has shared a letter to Attorney General Rob Bonta to review OpenAI’s transition from a non-profit entity to a profitable one.
“[Meta] is deeply concerned about OpenAI’s attempt to shed the non-profit status under which it was founded in order to establish a for-profit entity.
They also mentioned that failing to hold OpenAI accountable for its choice ‘could lead to a proliferation of similar start-up ventures’.
Are big tech companies facing the heat from Musk? Do note that Musk has been a significant supporter, both vocally and financially, of Donald Trump, who is set to take over as the new president of the United States. He, along with Vivek Ramaswamy, has been appointed as the head of the ‘Department of Government Efficiency’.
At the recent New York Times DealBook Summit interview, Altman said that it would be ‘profoundly un-American’ for Musk to use his political influence to hurt competitors or get an advantage for his interests.
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