Elon Musk, billionaire and founder of OpenAI, continues to criticize the organization he helped establish. After founding a competing company, xAI, Musk has taken legal action to defend his interests. Recently, he accused OpenAI of illegally restricting xAI’s access to capital.
This lawsuit is the fourth Musk’s representatives have filed against OpenAI in an American court. Alongside him are xAI executives and Shivon Zilis, a former OpenAI board member. According to CNBC, the lawsuit aims to achieve two objectives: to prevent OpenAI from transitioning into a fully commercial entity and to stop OpenAI from colluding with investors to block funding for other companies, including xAI.
OpenAI’s Shift and Musk’s Concerns
Founded in 2015 as a non-profit organization, OpenAI underwent a significant restructuring in 2019, introducing commercial elements into its mission. Although Musk no longer has direct ties to the startup, he opposed this shift. The current hybrid structure, where a non-profit entity oversees the commercial division, confuses investors, discouraging substantial investments.
Musk is particularly concerned about OpenAI’s growing ties with Microsoft, its largest investor. He opposes Microsoft’s representation on OpenAI’s board of directors, fearing it gives both companies undue competitive advantages. Musk’s legal team has accused OpenAI of leveraging this relationship to restrict xAI’s access to investors.
Growing Tensions and Market Rivalry
OpenAI dismissed Musk’s latest lawsuit as a “repetition of baseless accusations.” Founded in July 2023, Musk’s xAI already boasts a market cap of $50 billion, although it remains behind OpenAI’s $157 billion valuation. Despite this, xAI’s rapid growth is notable.
Musk’s lawyers argue that OpenAI operates as a “Frankenstein,” combining conflicting corporate structures to serve Microsoft’s financial interests. This partnership has also raised concerns among U.S. antitrust regulators. Microsoft, which has invested $14 billion in OpenAI, has yet to see returns, as this venture continues to generate losses, notes NIX Solutions.
We’ll keep you updated as this legal dispute unfolds, shedding light on its impact on the rapidly evolving AI market.