Musk Sues OpenAI Conversion from Non-Profit to for Microsoft Profit

by

Elon Musk co-founded OpenAI as a non-profit AI research company and helped create its founding charter. OpenAI licensed GPT-3 and pre-AGI to Microsoft and gave Microsoft access to its critical internal weights of the AI model. OpenAI with GPT-4 has become for profit and has basically partnered with Microsoft.

The Musk lawsuit is to force OpenAI to follow its founding non-profit charter. The lawsuit notes that if non-profits are allowed to convert to for profit, then investors can invest with a tax deduction into a non-profit during a research phase and then get all profits later. The tax deduction on the investment basically doubles the investment dollars of the company in the non-profit phase.

There is first the request to follow what Musk donated to support.
IF this is not followed then there is a suit for damages. Everyone was supposed to get open access to the service, which is now $20 per month. This would mean billions of people not getting $20 per month worth of AI.

What Elon and Sam were Saying in 2015

Elon Musk is suing Sam Altman and Open AI for putting profit before humanity and betraying its mission.

20 thoughts on “Musk Sues OpenAI Conversion from Non-Profit to for Microsoft Profit”

  1. Ellen is a pesca, they are very possessive, intervenous and their nose is everywhere.

  2. Instead of suing OpenAI, why doesn’t Musk start his own version of OpenAI? This make more sense than a frivolous lawsuit.

  3. Musk’s lawsuit is a joke and is very unlikely to succeed.

    https://www.businessinsider.com/elon-musk-throws-down-gauntlet-sam-altman-openai-lawsuit-2024-3

    As you can see from Business Insider, his case is incredibly weak, sufficiently so that a judge could consider it a frivolous one. If so, Musk could end up paying OpenAI’s legal fees as well as his own.

    In any case, this suit is a stupid act on the part of someone with Musk’s wealth. If I were as wealthy as Musk and I did not think that OpenAI was making good decisions, I would not sue them. I would simply start a company to compete with them. After all, if you are so convinced that a particular company’s management is being stupid, is that not an opportunity to compete with their asses and bury them in the dust? Starting a competing company is a more profitable and sensible approach than to sue someone you don’t like,

    • Competition is obviously not the answer here. Musk’s issue with OpenAI is that they chose to put profit above their founding goal (you could say they were too competitive). Their management is making great decisions, financially. Opening a competing business only makes sense where management is not effectively making money, not when they are choosing to make money by abandoning their charter. You can’t compete with them and also make money.

      • Competition is always the answer because it is the holy grail of all progress. Competition forces you to work and actually provide value in return for the money you are pulling in.

        Musk clearly is unhappy with the decisions OpenAI has made, whether it be a profit or non-profit. If so, he should start his own version of OpenAI and show all of us rubes how to really do it right.

        There is a discussion on a legal blog that suggests the real reason Musk is suing OpenAI is because he wants access to their technology without paying for it. He started his own AI company and it failed. Now he wants to try again but wants access to technology that really is not his.

        • You haven’t really acknowledged my point. Competing with OpenAI isn’t an option because Elon isn’t interested in outperforming them on the market, he wants an AI company that works “in the benefit of all mankind”. Confounding his efforts is an AI company that already exists, that he donated $44M to (OpenAI), and is basically for-profit at this point. He can’t make a company that effectively competes with OpenAI and is not for-profit. Also, I don’t find much value in the argument that “he should start his own version of OpenAI and show all of us rubes how to really do it right.” If OpenAI really is guilty of breach of contract, it’s not Elon’s responsibility to demonstrate how to run a proper AI company. It would be upon OpenAI to make restitution for the wrong they have done.

          • If you read the Business insider article I linked to, you will see that Musk does not have much of a case. Lawsuits of this kind hinge on two criteria, breach of contract or fiduciary duty. Since we’re talking about a non-profit, the latter does not apply. The article says that there was no written agreement and alludes to the possibility of a verbal agreement. Now verbal agreements can be enforced by the courts. But they have to be substantial and not just on the level of “he said, she said”. The verbal agreement that Musk cites appears to be at this level. Worse for his case, Musk is not a signatory to the original articles of incorporation (of the non-profit) and he gave up his board seat in 2018. All of this suggests a case that is very weak. Not only do I think his case will be thrown out, but that he may well be hit for filing a frivolous lawsuit and be forced to pay OpenAI’s legal fees as well.

            OTOH, it would be very easy for the case to be settled out of court by OpenAI simply paying back the $44M to Musk. This is chump change compared to the current market value of OpenAI. In the unlikely case Musk did win the case, he would simply get his $44M back and that would be the end of the story.

            Do bear in mind that the only reason why OpenAI became a profit company was because the board (of the non-profit) self sabotaged the R&D efforts of the former. Not only do I think Sam Altman has a strong case for suing the board of the non-profit, I think such self-sabotage could constitute criminal liability as well on the part of the board.

  4. He cofounded the company with his money. He didnt get a dime for it and Microsoft took the spoils. From that standpoint let him sue them. Perhaps he can get lucky. Their mission was to be non profit and they turned hardcore profit. Let laws decide.

  5. Since Musk became world’s richest man, he lost his mind. He went from a passionate technologist to a complotist who just want more cash. I miss the musk from the early 2010s.

    • If I know Musk (not personally, just been following him for ~15 years) this has very very little to do with the money. It’s about making sure AI isn’t evil. For the foreseeable future, AI is only as good as the people creating it, and if those people don’t have noble intentions, it could lead to the end of our species. If AI is open source, people can check it, akin to “airing out your dirty laundry”.
      AI is getting very powerful, and were right on the cusp of AGI, if not there already. I’m fine with companies profiting off of it, but it should be open source, like Musk’s “Grok”, or Zuck’s ” Llama.

  7. Musk just wants more $ – there is moral angle here. How could OpenAI possibly keep its lead in R&D in this field without the amount of investment that only comes with a profit motive? As if OpenAI could have ever kept a lid on this thing! Once innovations are publicized the Jeannie is out of the bottle.

    • It’s not about keeping a lid on things, it’s about keeping it *open*. Instead, with their profitable “Jeannie”, OpenAI is keeping a lid on the source code and models, and using it to make money for microsoft.

  8. I like Musk, but I think he’ll lose. BUT, I’m no lawyer, I hate lawyers. that is all, good day sir.

    • Musk has a stronger argument for standing than just about anyone. He donated a large amount of money to OpenAI as a nonprofit, then OpenAI formed a for-profit entity that competes with his companies.

      • There is no written contract. Courts generally do not consider verbal contracts to be real due to the “he said, she said” issue. Do an internet search on this case and you will see my point. Nearly all lawyers interviewed on this admit a lack of legal standing.

        It is also worth noting that Musk started his own AI development work that can be interpreted as competition with OpenAI, which would also dramatically weaken his case against OpenAI.

        It should also be noted that the Board of the non-profit OpenAI acted in a manner that was against normal fiduciary duty that boards have to the companies they manage. It was this that prompted Sam Altman to convert the company into a for-profit company in the first place. If anything, Sam Altman has a very strong case for suing the board of the non-profit for its breach of fiduciary duty to OpenAI and the purpose that OpenAI was created for in the first place.

        For those tuning in late to the story, OpenAI was created as a non-profit for the express purpose of creating open sourced AI that would be available to anyone. The board breached this purpose by deliberately inhibiting both the development of and the open source desemination of AI for the general public. This constitutes a breach of duty and makes the board liable for lawsuit.

Comments are closed.