One of many fascinating details in the multi-year legal dispute between Elon Musk and OpenAI is that OpenAI president Greg Brockman saw it coming miles away, writing in what was essentially his diary back in 2017 that he couldn’t “see us turning this into a for-profit without a very nasty fight” with Elon Musk. Neither side disputes that Brockman wrote this.
And what could be nastier than the richest man in the world suing your company (and also Microsoft) for $134 billion, a sum roughly the size of the nominal GDP of Kenya, and more than the revenue Tesla made last year?
OpenAI has been consistent in its public statements, saying the suit is both baseless and part of a harassment campaign. Specifically, one on January 8 called the suit “baseless and a part of his ongoing pattern of harassment.” On January 16, according to Bloomberg, OpenAI said “Mr Musk’s lawsuit continues to be baseless and a part of his ongoing pattern of harassment, and we look forward to demonstrating this at trial,” adding “This latest unserious demand is aimed solely at furthering this harassment campaign.”
If there’s a basis for this latest claim, it’s spelled out in the latest court filing from the plaintiff’s side in this suit. The document is brief and pretty lucid, and concerns “wrongful gains,” which should have been the name of ESPN’s podcast documentary about Jose Canseco.
The “wrongful gains” argument stems from Musk’s claim that he ponied up $38 million or about 60% of the seed funding OpenAI needed to begin operations as a nonprofit, and made “nonmonetary contributions,” such as roping in “key employees,” putting the founders in touch with people, mentoring them, and “lending his prestige and reputation to the venture.”
In early coverage of OpenAI, Musk comes across as a crucial progenitor of OpenAI who later parted with it amicably. The New York Times, for instance, wrote in 2018 that “In 2015, Elon Musk, the chief executive of the electric-car maker Tesla, and other well-known figures in the tech industry created OpenAI and moved it into offices just north of Silicon Valley in San Francisco,” but that, “he has stepped down from the OpenAI board, with the lab saying this would allow him to ‘eliminate a potential future conflict.’”
The core of Musk’s suit is that OpenAI turned against its stated purpose after Musk provided the funding that got it off the ground. It underwent a restructuring that has resulted in the nonprofit turning almost entirely into a for-profit public benefit corporation—though it is still controlled to some degree by a separate nonprofit called the OpenAI Foundation.
Musk would, as you’re no doubt aware, go on to found one of OpenAI’s main competitors, xAI, which has an estimated valuation of $230 billion, a little less than double the sum he’s now demanding in his OpenAI suit. xAI is entirely for-profit, and while it was once a public benefit corporation, that constraint was “secretly” abandoned last year, according to CNBC.
The total demand from Musk hasn’t even been tallied yet. According to the filing, he “intends to seek other monetary remedies at trial as well, including punitive damages.”
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