Elon Musk Sues OpenAI Over Breach Of Contract

Elon Musk has sued OpenAI and its chief executive and co-founder Sam Altman over breach of contract, arguing the firm is no longer following its original non-profit principles.

Musk’s lawsuit, filed in a San Francisco court, argues that OpenAI is no longer focused on its original mission of developing artificial general intelligence (AGI) in a way that would “benefit humanity”, as was the plan when Musk helped found the company in 2015.

AGI refers to computer technology that can carry out tasks with a facility equal to or greater than that of a human being.

Instead, the company’s multibillion-dollar investments from Microsoft mean it is making “proprietary technology to maximise profits for literally the largest company in the world”.

Image credit: Levart Photographer/Unsplash

Non-profit mission

Musk, who donated $44 million (£35m) to the group, said he had been “induced” to do so by promises “including in writing” that it would remain non-profit.

The entrepreneur left OpenAI’s board in 2018 and a year later the group opened the for-profit unit into which Microsoft has invested some $13bn.

“This case is filed to compel OpenAI to adhere to the Founding Agreement and return to its mission to develop AGI for the benefit of humanity, not to personally benefit the individual Defendants and the largest technology company in the world,” the lawsuit says.

It claims OpenAI is now a “closed-source de facto subdsidiary” of Microsoft.

SEC probe

Musk’s own AI company, xAI, founded in July of last year, is a direct competitor to OpenAI.

OpenAI’s close relationship with Microsoft came into the spotlight in November 2023 when OpenAI’s board fired Altman before re-hiring him days later.

Microsoft was closely involved in the drama, including offering to hire OpenAI staff who threatened to quit in protest at Altman’s sacking, but did not have a direct say in the matter.

Last week the Wall Street Journal reported the US Securities and Exchange Commission was examining Altman’s internal communications as part of a probe into whether he misled investors.

When board members fired him they claimed he had not been “consistently candid in his communications” with them.

Competition concerns

Musk’s lawsuit argued the “stunning developments” around Altman’s temporary sacking highlighted Microsoft’s influence over the company.

Microsoft’s relationship with OpenAI is being investigated by competition authorities in the EU, UK and US.

Matthew Broersma

Matt Broersma is a long standing tech freelance, who has worked for Ziff-Davis, ZDnet and other leading publications

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