Elon Musk Sues OpenAI For its "Hot-Air Philanthropy"

We told you earlier this year that Elon Musk, once a big supporter of tax-exempt OpenAI, sued Sam Altman and all the other effective altruists involved with OpenAI. In that state court action, Musk alleged that by entering a joint venture with Microsoft, OpenAI turned its back on its charitable mission:

By embracing a close relationship with Microsoft, OpenAI and its top executives have set that pact “aflame” and are “perverting” the company’s mission, Musk alleges in the lawsuit.  “OpenAI, Inc. has been transformed into a closed-source de facto subsidiary of the largest technology company in the world: Microsoft,” the lawsuit filed Thursday says. “Under its new Board, it is not just developing but is actually refining an AGI to maximize profits for Microsoft, rather than for the benefit of humanity.”

Musk later voluntarily withdrew the state court action without explanation.  On Monday, he filed a new complaint, this time in federal court.  Sam had some initial observations yesterday and he might share more as he reads the complaint closely.  I am just here to admire the complaint's story-telling.  Here is the introduction:

NATURE OF THE ACTION

1. Elon Musk’s case against Sam Altman and OpenAI is a textbook tale of altruism versus greed.  Altman, in concert with other Defendants, intentionally courted and deceived Musk, preying on Musk’s humanitarian concern about the existential dangers posed by artificial intelligence (“AI”). Altman and his long-time associate Brockman assiduously manipulated Musk into co-founding their spurious non-profit venture, OpenAI, , by promising that it would chart a safer, more open course than profit-driven tech. The idea Altman sold Musk was that a non-profit, funded and backed by Musk, would attract world-class scientists, conduct leading AI research and development, and, as a meaningful counterweight to Google’s DeepMind in the race for Artificial General Intelligence (“AGI”), decentralize its technology by making it open. Altman assured Musk that the non-profit structure guaranteed neutrality and a focus on safety and openness for the benefit of humanity, not shareholders. But as it turns out, this was all hot-air philanthropy—the hook for Altman’s long con.

2. After Musk lent his name to the venture, invested significant time, tens of millions of dollars in seed capital, and recruited top AI scientists for OpenAI, Musk and the non-profit’s namesake objective were betrayed by Altman and his accomplices.  The perfidy and deceit are of Shakespearean proportions.

3.  Once OpenAI, Inc.’s technology approached transformative AGI, Altman flipped the narrative and proceeded to cash in. In partnership with Microsoft, Altman established an opaque web of for-profit OpenAI affiliates, engaged in rampant self-dealing, seized OpenAI,’s Board, and systematically drained the non-profit of its valuable technology and personnel.  The resulting OpenAI network, in which Altman and Microsoft hold significant interests, was recently valued at a staggering $100 billion.

4. The world has gotten wise to Defendants’ scheme. Not only are there several pending lawsuits against OpenAI, over its unlawful practices, but Defendants are also under investigation by multiple federal agencies, including the Securities and Exchange Commission and the Federal Trade Commission, and are the subject of numerous consumer advocacy complaints to the California Attorney General. A recent spate of OpenAI executives and insiders have blown the whistle on Altman, exposing his unscrupulous maneuvering and self-dealing. Indeed, just this June it was reported that Altman, foregoing any further humanitarian pretense, proposed to OpenAI’s stakeholders that it be converted to an entirely for-profit enterprise, shielding Defendants from public oversight and the mandatory financial disclosures of a non-profit.

5. As a result of their unlawful actions, Defendants have been unjustly enriched to the tune of billions of dollars in value, while Musk, who co-founded their de-facto for-profit start-up, has been conned along with the public, whom its vital technology was supposed to benefit. Musk brings this remedial action to divest Defendants of their ill-gotten gains.

Musk's first state court complaint asserted just four causes of action including breach of contract and promissory estoppel.  His renewed action asserts 15 different causes of action, including  fraud, RICO violations, breach of implied contract, breach of an implied covenant of good faith and fair dealing, Lanham Act violations, and violations of California's unfair competition and false advertising statutes.  Everything except the kitchen sink.  

It's hard to know what motivates Musk.  But the WSJ notes that Musk recently launched his own artificial intelligence company, xAI.  Musk formed that company as a benefit corporation so he has not completely abandoned the idea that altruism and profit-making can coexist.  He just doesn't think it is coexisting very well at all in the OpenAI joint venture.

darryll k. jones