OpenAI Launches Legal Counteroffensive Against Elon Musk and xAI
OpenAI has launched a legal counteroffensive against its co-founder, Elon Musk, and his competing AI venture, xAI. The legal documents filed yesterday accuse Musk of orchestrating a "relentless" and "malicious" campaign designed to "take down OpenAI" after he left the organization years ago.
Origin Story of OpenAI and the Departure of Elon Musk
The legal documents recount OpenAI’s origins in 2015, stemming from an idea discussed by current CEO Sam Altman and President Greg Brockman to create an AI lab focused on developing artificial general intelligence (AGI) – AI capable of outperforming humans – for the "benefit of all humanity." Musk was involved in the launch, serving on the initial non-profit board and pledging $1 billion in donations.
Restructuring, Success, and Musk’s Alleged ‘Malicious’ Campaign
Facing escalating costs for computing power and talent retention, OpenAI restructured and created a "capped-profit" entity in 2019 to attract investment while remaining controlled by the non-profit board and bound by its mission. This structure, OpenAI states, was announced publicly and Musk was offered equity in the new entity but declined and raised no objection at the time.
OpenAI highlights its subsequent breakthroughs – including GPT-3, ChatGPT, and GPT-4 – achieved massive public adoption and critical acclaim. These successes, OpenAI emphasizes, were made after the departure of Elon Musk and allegedly spurred his antagonism.
Musk’s Alleged ‘Malicious’ Campaign
The filing details a chronology of alleged actions by Elon Musk aimed at harming OpenAI:
- Founding xAI: Musk "quietly created" his competitor, xAI, in March 2023.
- Moratorium call: Days later, Musk supported a call for a development moratorium on AI more advanced than GPT-4, a move OpenAI claims was intended "to stall OpenAI while all others, most notably Musk, caught up."
- Records demand: Musk allegedly made a "pretextual demand" for confidential OpenAI documents, feigning concern while secretly building xAI.
- Public attacks: Using his social media platform X (formerly Twitter), Musk allegedly broadcast "press attacks" and "malicious campaigns" to his vast following, labeling OpenAI a "lie," "evil," and a "total scam."
- Legal actions: Musk filed lawsuits, first in state court (later withdrawn) and then the current federal action, based on what OpenAI dismisses as meritless claims of a "Founding Agreement" breach.
- Regulatory pressure: Musk allegedly urged state Attorneys General to investigate OpenAI and force an asset auction.
- "Sham bid": In February 2025, a Musk-led consortium made a purported $97.375 billion offer for OpenAI, Inc.’s assets. OpenAI derides this as a "sham bid" and a "stunt" lacking evidence of financing and designed purely to disrupt OpenAI’s operations.
OpenAI’s Counterclaims
Based on these allegations, OpenAI asserts two primary counterclaims against both Elon Musk and xAI:
- Unfair competition: Alleging the "sham bid" constitutes an unfair and fraudulent business practice under California law, intended to disrupt OpenAI and gain an unfair advantage for xAI.
- Tortious interference with prospective economic advantage: Claiming the sham bid intentionally disrupted OpenAI’s existing and potential relationships with investors, employees, and customers.
Conclusion
The counterclaims mark a dramatic escalation in the legal battle between the AI pioneer and its departed co-founder. While Elon Musk initially sued OpenAI alleging a betrayal of its founding non-profit, open-source principles, OpenAI now contends Musk’s actions are a self-serving attempt to undermine a competitor he couldn’t control.
Frequently Asked Questions
Q: What is the main dispute between OpenAI and Elon Musk?
A: The main dispute is over OpenAI’s alleged "malicious" campaign against Musk’s xAI.
Q: What are the allegations against Elon Musk?
A: The allegations include founding xAI, making a "moratorium call" to stall OpenAI development, demanding confidential records, making public attacks, and filing lawsuits.
Q: What is the purpose of OpenAI’s counterclaims?
A: The purpose is to stop Musk’s alleged "unlawful and unfair action" and seek compensation for damages already caused.
Q: What is the next step in this legal battle?
A: The case will proceed to court, where OpenAI and Musk will present their cases and evidence.
