It is a peculiar lawsuit in which the beneficiary is all of society, not Musk himself

5 Min Read
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At a Glance

  • Elon Musk is suing OpenAI for breach of contract after it created a for-profit arm that is 49% owned by Microsoft.
  • Musk said he gave OpenAI money as a nonprofit to be a counterweight against for-profit Google and its AI ambitions.
  • It is a peculiar lawsuit in which the main beneficiary is humanity instead of the plaintiff.

Elon Musk is suing OpenAI for alleged breach of contract, claiming the ChatGPT creator has violated its founding pledge to be a nonprofit, which the tech billionaire said he funded and nurtured.

In a bombshell 46-page complaint, Musk lists OpenAI CEO Sam Altman and President Greg Brockman as defendants, contending that he was essentially defrauded by their decision to create a for-profit arm in which Microsoft has a 49% stake in exchange for at least $10 billion.

It is a peculiar lawsuit in that the beneficiary is “humanity” instead of the sole plaintiff, Musk, although he had to show he suffered financial harm for the complaint to make it to court. The lawsuit also exemplifies the rarefied group in which elite tech leaders belong; they can afford to litigate theoretical issues with purported planetary significance.

Musk has been on a quest to stop or slow down the development of artificial general intelligence or AGI, when machines reach superhuman intelligence such that they can do general cognitive tasks reserved for humans. The fear is that these machines will make humans redundant and will not hesitate to wipe out society in the name of efficiency. The lawsuit is Musk’s latest effort in this quest since AGI’s risk to humanity has been giving him “extreme mental stress.”

Related:Elon Musk Launches New AI Superintelligence Startup

This is the same billionaire who started Tesla to save the planet from environmental harm and SpaceX to establish a human colony in Mars in case Earth does not make it.

In the lawsuit filed with a California state court, Musk wants OpenAI to make its AI models open to the public and stop using its technology to benefit Microsoft and others. It also wants the court to determine that GPT-4 and Q* (Q star) constitute AGI and thus would be outside the clutches of Microsoft. Musk also seeks monetary damages that he will then give to a charity.

AI Business reached out to OpenAI for comment.

Blame DeepMind's CEO

Ironically, it was the Google DeepMind CEO Demis Hassabis who first alerted Musk to the existential risk of AGI, according to the lawsuit. In a 2012 meeting, they discussed the biggest threats to society and Hassabis told Musk about the dangers of AI advancements. Back then, DeepMind was an AI leader that would later be acquired by Google.

To counteract Google/DeepMind, which as a for-profit would seek to benefit shareholders instead of society, Musk got together with Altman, back then the president of Y Combinator, a startup incubator. Altman had an idea for an AI lab set up as a nonprofit to develop the first general AI. The nonprofit would own the technology that will be “used for the good of the world,” according to the lawsuit.

Related:Elon Musk and the Other AI Race That’s Going On

But now, Musk claims that OpenAI has “abandoned” its nonprofit mission by aligning with Microsoft and replacing the OpenAI board with folks who are more sympathetic to its commercial pursuits. The board shuffle came after Altman was fired last November for still unclear reasons (the SEC reportedly is looking into it now) and reinstated within days after lobbying from its investors and Microsoft.

Critically, OpenAI’s board is the one tasked with determining whether the startup has developed tech that has reached AGI. Microsoft has rights to all of OpenAI’s tech except AGI. But now with a more pliant board, Musk fears that Microsoft will get its hands on AGI to commercialize it because the board will play along.

“OpenAI Inc.’s new captured, conflicted, and compliant board will have every reason to delay ever making a finding that OpenAI has attained AGI,” the complaint said. “OpenAI’s attainment of AGI, like ‘Tomorrow’ in Annie (the musical), will always be a day away, ensuring that Microsoft will be licensed to OpenAI’s latest technology and the public will be shut out."

Microsoft already has dibs on AGI?

Related:OpenAI Fires CEO Sam Altman

Musk said that OpenAI’s GPT family of large language models initially were made open and available. But it all began changing with GPT-4, OpenAI’s most powerful language model that it kept under wraps. GPT-4 is so powerful that Microsoft’s own researchers called it an “early (yet still incomplete) version of an artificial general intelligence (AGI) system,” the lawsuit contended.

Also, OpenAI is developing a model called Q* that is even closer to AGI, Musk claimed.

Meanwhile, GPT-4 has been integrated into Microsoft’s Office productivity suite such that it is “now a de facto Microsoft proprietary algorithm.” That means OpenAI has become a closed-source de facto subsidiary of Microsoft, the largest technology company in the world based on market value, the lawsuit further claimed.

Musk's lawsuit also pointed out that OpenAI’s pivot from nonprofit to for-profit defrauds the government on taxes. Investors funding a startup that started as a nonprofit can take tax deductions from their donations and then later profit when the startup becomes a for-profit entity.

If other startups follow OpenAI’s playbook, it would “become standard operating procedure for start-ups to the detriment of legitimate non-profits, the government’s tax coffers, and ultimately the people of California and beyond,” according to the lawsuit.

Musk’s xAI counters OpenAI

Musk was one of the co-founders of OpenAI, but left in 2018 due to disagreements over its pivoting away from being a nonprofit. He has been a vocal critic of the partnership with Microsoft, saying on Fox News last year that Microsoft “has a very strong say in, if not directly controls” OpenAI.

Musk has since set up xAI, pinching staff from Google DeepMind, OpenAI, Microsoft Research and Tesla to build rival systems. So far, xAI’s efforts has been to build Grok - an AI chatbot with a sense of humor and sarcasm with access to real-time data - as well as PromptIDE, a development environment for prompt engineering and LLM research.

Meanwhile, competition authorities in the U.K., U.S and European Union are probing OpenAI’s partnership with Microsoft on antitrust concerns.

Read more about:

ChatGPT / Generative AI

About the Author(s)

Ben Wodecki

Jr. Editor

Ben Wodecki is the Jr. Editor of AI Business, covering a wide range of AI content. Ben joined the team in March 2021 as assistant editor and was promoted to Jr. Editor. He has written for The New Statesman, Intellectual Property Magazine, and The Telegraph India, among others. He holds an MSc in Digital Journalism from Middlesex University.

Deborah Yao


Deborah Yao runs the day-to-day operations of AI Business. She is a Stanford grad who has worked at Amazon, Wharton School and Associated Press.

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