The U.S. Department of Justice (DOJ) and Federal Trade Commission (FTC) have partially supported Elon Musk’s claims in his ongoing lawsuit against OpenAI, as he seeks to block the artificial intelligence (AI) startup’s transition to a for-profit entity.
In a court filing on Friday, the agencies argued that overlapping board directors could harm market competition, even if the individuals in question have since stepped down.
Musk’s lawsuit accuses OpenAI and Microsoft of violating antitrust laws, highlighting Reid Hoffman’s simultaneous board memberships at both companies between 2017 and 2023.
Hoffman, a co-founder of LinkedIn, is alleged to have created conflicts of interest during his tenure.
Additionally, the suit points to Deannah Templeton, a Microsoft executive, who served as a non-voting participant on OpenAI’s board from December 2023 to July 2024.
The DOJ and FTC’s position
While the agencies did not explicitly oppose OpenAI’s restructuring, their filing emphasizes concerns about anti-competitive practices stemming from inappropriate board overlaps.
The DOJ and FTC noted in their filing: “Where a defendant voluntarily ceases illegal conduct, it still bears a heavy burden to demonstrate it is absolutely clear that the allegedly wrongful behaviour could not reasonably be expected to recur.”
- The FTC is also investigating OpenAI as part of several probes into AI investments by Microsoft and other technology giants.
- The agency has been examining whether OpenAI misled consumers about its services and whether inappropriate board overlaps involving Hoffman and Templeton violated antitrust regulations.
- Hoffman has publicly criticized FTC Chair Lina Khan, even calling for her removal from the agency.
Musk’s fight against openAI’s conversion
The lawsuit forms part of Musk’s broader campaign against OpenAI CEO Sam Altman. Musk has alleged that OpenAI has strayed from its nonprofit origins, claiming it abandoned its founding mission of advancing AI for the public good when it began receiving billions in funding from Microsoft starting in 2019.
Musk’s recent filing seeks an injunction to halt OpenAI’s transition to a for-profit model, labeling the move “illegal.”
- A hearing on the injunction is scheduled for Tuesday in Oakland, California.
- Meanwhile, OpenAI has dismissed Musk’s lawsuit as baseless, arguing that his claims are inconsistent with his past support for a corporate structure that allowed for-profit operations.
- The company has defended the board stints of Hoffman and Templeton, stating they did not breach antitrust laws.
- OpenAI has so far refrained from commenting on Friday’s filing but maintains that its restructuring aligns with its strategic goals.
A long-running dispute
This legal battle marks the latest chapter in Musk’s history with OpenAI. The billionaire, who departed from the company in 2018 and later founded rival AI firm xAI in 2023, first filed a lawsuit against OpenAI in February before withdrawing it in June.
The litigation was reintroduced in federal court in August.
Musk argues that without immediate judicial intervention, OpenAI’s market dominance could stifle competition, making it nearly impossible for rivals to compete with what he describes as Altman’s “behemoth.”
The case, Musk v. Altman, continues in the U.S. District Court, Northern District of California, with significant implications for AI regulation, corporate governance, and the future of the technology sector.
