(April 27): Elon Musk and Sam Altman will face off this week in a trial that could determine the future of OpenAI.
The high-profile showdown between the artificial intelligence (AI) titans is the culmination of years of animosity and public feuding over the startup that the pair founded together more than a decade ago, before their relationship soured and they became rivals.
Musk alleges Altman and other leaders at OpenAI enriched themselves by abandoning its altruistic principles and converting to a for-profit company with billions of dollars in support from Microsoft Corp. OpenAI and Altman have accused Musk of harassment and say the real goal of the lawsuit is to undercut competition with his own startup that he co-founded in 2023, xAI.
The world’s richest person is seeking as much as US$134 billion in damages from OpenAI and Microsoft — a stratospheric amount for a court case — all of which he pledged just this month to give to OpenAI’s charitable arm and not to himself or any of his companies. Musk also is asking the court to remove Altman and OpenAI president Greg Brockman from their leadership positions.
But the biggest threat to OpenAI is that Musk is seeking to restore the startup’s status as a full non-profit research organisation by unwinding the for-profit restructuring that was completed in October. Altman pitched the conversion as critical to securing the vast amount of funding OpenAI needs to fulfill its mission of creating artificial general intelligence — or AGI — that will benefit humanity.
Critical moment
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Such a shakeup to OpenAI’s C-suite or core structure could destabilise the company during a critical moment as it’s eyeing a much-anticipated public offering that could be one of the largest in history; the startup was last valued at US$852 billion in March.
The brief, failed ouster of Altman in 2023 almost collapsed the ChatGPT maker, with investors pressing the board to bring back Altman and employees pledging to quit en masse if the CEO wasn’t reinstated.
Another disruption of that magnitude could stymie the company, leaving an opening for rivals to gain ground including xAI, the maker of the Grok chatbot that was recently acquired by SpaceX as Musk’s rocket ship company plans an IPO.
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Microsoft also has a lot on the line, as the restructuring of OpenAI gave the software giant a 27% stake in the startup.
Resurgent competition
Regardless of the outcome, the two years the legal fight has been playing out and the three-week trial amount to a lengthy distraction for OpenAI and its staff at a time when it faces resurgent competition.
The trial will resurface years-old drama over the actions of OpenAI’s leaders and whether they’ve adhered to their mission to benefit the public in the startup’s rapid expansion to become one of the worlds’ most valuable, powerful companies leading the global AI boom.
“The stakes are really big for OpenAI, almost existential,” said Dorothy Lund, a law professor at Columbia University and co-host of the Beyond Unprecedented podcast. “Musk is asking for stuff and any one of the things he’s asking for could be the end of OpenAI.”
Jury selection is scheduled for Monday, and opening arguments and testimony are expected to start on Tuesday. The case has been divided into two phases: The first will focus on the veracity of Musk’s allegations about the defendants — OpenAI, Altman, Brockman and Microsoft. The second will determine an appropriate remedy if the jury and judge find in Musk’s favor.
The trial will revisit the founding years of OpenAI and Musk’s departure in 2018, which he has said was due to disagreements about the company’s development. Microsoft will be defending itself against Musk’s claims that it aided the abandonment of OpenAI’s mission when it invested US$13 billion in the startup starting in 2019.
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OpenAI’s argument
OpenAI has argued that Musk’s claims are unfair because he was initially on-board for a for-profit pivot and at one point pitched having Tesla absorb the startup as part of a conversion.
OpenAI countersued Musk a year ago, accusing him of weaponising legal claims, social media posts and news stories to try to sabotage the startup’s success. Those claims are still pending but won’t be part of the trial.
Microsoft, meanwhile, has argued that its investment in OpenAI was critical to funding the development of cutting-edge technology and has rejected Musk’s allegation that it “aided and abetted” a betrayal of the startup’s founding mission.
Musk’s complaint in November 2024 listed 26 claims, but several were dismissed, others were abandoned and some were put on hold until after the trial. With Musk dropping two fraud allegations last week, the claims the jury will consider are breach of charitable trust and unjust enrichment.
Both Musk and Altman are expected to testify during the first phase of the proceedings. Musk is a relative veteran of courtroom clashes, earning himself the nickname “Teflon Elon” because he usually prevails in trials. This will be Altman’s first trial, though he has testified publicly in Congress.
Possible witnesses
Other possible witnesses include: Brockman, Microsoft chief executive officer Satya Nadella, Musk’s longtime business manager Jared Birchall, former OpenAI chief scientist Ilya Sutskever, and several current and formal employees and board members of OpenAI. That includes Shivon Zilis, who has four children with Musk.
Witnesses are likely to be questioned thoroughly over their private communications about OpenAI, Musk and the company’s future.
Hundreds of pages of evidence already have been made public, including text messages between Musk and Zilis about how he viewed his relationship with OpenAI and emails between Musk, Altman, Brockman and Sutskever in the early days of the startup.
US District Judge Yvonne Gonzalez Rogers has said some character evidence will be off-limits during the trial. OpenAI had sought to question Musk about his alleged use of ketamine, an anesthetic drug that can have hallucinogenic properties.
But Gonzalez Rogers said there wasn’t enough evidence about ketamine’s mind-altering effects to suggest it might have impacted Musk’s negotiations with OpenAI.
Burning Man
Lawyers for OpenAI will be allowed to ask Musk about his attendance at Burning Man, an annual festival in the Nevada desert where drug use is common. OpenAI’s attorneys said “a lot of significant communications” between Musk and OpenAI happened while he was at the festival.
Gonzalez Rogers has also restricted what Musk can present to explain his motives for suing — including that he won’t keep any damages that may be awarded at the trial’s conclusion.
The jury will issue an “advisory verdict” at the conclusion of testimony. A final ruling on Musk’s claims — and any remedies — will be issued by Gonzalez Rogers, using the jury’s findings as a guidepost.
"We ascertain a 60% chance Musk wins at trial. Musk’s case is vulnerable later on appeal," say litigation analyst Matthew Schettenhelm and industry analyst Tamlin Bason at Bloomberg Intelligence.
Even if Musk loses, the trial could still pay off for him because it will put all sorts of closely guarded information about how OpenAI operates in the public realm and “some of that can be useful for his own private endeavors in this AI race,” according to Lund.
“In a way, just the fact that this thing is going to trial is already a big win for Musk in this information-forcing aspect.”
The case is Musk v Altman, 4:24-cv-04722, US District Court, Northern District of California (Oakland).
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