Elon Musk is asking a federal court to block OpenAI from becoming a fully for-profit company.
Lawyers representing Musk, his artificial intelligence startup xAI, and former OpenAI board member Shevon Ziles filed a preliminary injunction against OpenAI on Friday. The injunction will also prevent OpenAI from requiring its investors to refrain from funding competitors, including xAI and others.
The latest court filings represent an escalation in the legal dispute between Musk, OpenAI and its CEO Sam Altman, as well as other long-involved parties and backers including tech investor Reed Hoffman and OpenAI. Microsoft.
Musk had filed a lawsuit against OpenAI in March 2024 in San Francisco state court, before withdrawing that complaint and refiling several months later in federal court. Musk's lawyers in the federal lawsuit, led by Mark Toberoff in Los Angeles, argued in their complaint that OpenAI had violated federal racketeering, or RICO, laws.
In mid-November, they expanded their complaint to include allegations that Microsoft and OpenAI violated antitrust laws when the maker of Chat GPT asked investors to agree not to invest in competing companies, including Musk's newest startup, xAI.
“Elon’s fourth attempt, which once again repeats the same baseless complaints, remains completely baseless,” an OpenAI spokesperson said in a statement.
Microsoft declined to comment.
Musk's lawyers are also asking the court to limit what they claim are improper business advantages stemming from OpenAI's close relationship with Microsoft, its main backer and partner.
OpenAI has emerged as one of the biggest startups in recent years, with ChatGPT being a huge success and helping spark massive corporate enthusiasm around AI and related large language models.
Since Musk announced xAI's debut in July 2023, his newest AI company has launched its chatbot Grok and raised as much as $6 billion at a $50 billion valuation, in part to buy 100,000. Nvidia The chips, CNBC reported earlier this month.
“Microsoft and OpenAI now seek to consolidate this dominance by denying competitors access to venture capital (a collective boycott), while continuing to profit from competitively sensitive information shared over years during the formative years of AI,” the lawyers wrote in the lawsuit. Deposit.
The terms that OpenAI asked investors to agree to amount to a “mass boycott” that “blocks XAI’s access to seed investment capital,” the lawyers wrote.
The lawyers later added that OpenAI “cannot treat the market as a Frankenstein, cobbled together from any form of corporation that serves Microsoft's financial interests.”
In July, Microsoft gave up its observer seat on OpenAI's board, though CNBC reported that the FTC would continue to monitor the influence of two companies on the AI industry.
OpenAI first emerged in 2015 as a non-profit and then in 2019, transitioned to a so-called profit-maximum model, where the non-profit OpenAI was the governing entity of its for-profit subsidiary. It is in the process of becoming an entirely for-profit public benefit corporation, which could make it more attractive to investors. The restructuring plan will also allow OpenAI to retain its nonprofit status as a separate entity, CNBC previously reported.
Microsoft has invested nearly $14 billion in OpenAI but revealed in October as part of its fiscal first-quarter earnings report that it would post a loss of $1.5 billion in the current period largely due to the expected loss from OpenAI.
In October, OpenAI closed a large funding round that valued the startup at $157 billion. Thrive Capital led the financing while investors including Microsoft and Nvidia also participated.
OpenAI has faced increasing competition from startups like xAI and Anthropic and tech giants like Google. The generative AI market is expected to reach $1 trillion in revenue within a decade, and corporate spending on generative AI has risen by 500% this year, according to recent data from Menlo Ventures.
CNBC reached out to Musk's attorney on Saturday. They did not respond to requests for comment.
— CNBC's Hayden Field contributed reporting
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