Elon Musk is demanding between $79 billion and $134 billion in damages from OpenAI Inc. and Microsoft, claiming the artificial intelligence firm defrauded him by abandoning its nonprofit mission.
This is according to court filings submitted on Friday, following a US federal judge’s decision to allow the case proceed to a jury trial in late April in Oakland, California.
The dispute centres on OpenAI’s restructuring, its partnership with Microsoft, and Musk’s early role as a co-founder and benefactor.
Musk’s legal team argues that the generative AI company’s current valuation, estimated at $500 billion, reflects wrongful gains derived from a shift away from the nonprofit principles under which it was founded in 2015.
Musk had donated about $38 million in seed funding to OpenAI before leaving its board in 2018.
What they are saying
In the filing, Musk’s lawyer, Steven Molo, said the damages calculation was based on analysis by financial economist C. Paul Wazzan, an expert witness in the case.
According to Wazzan’s assessment, Musk is entitled to a substantial portion of OpenAI’s valuation because he was allegedly defrauded after contributing financially and strategically to the startup’s early growth.
- The filing states that OpenAI’s alleged wrongful gains range from $65.50 billion to $109.43 billion, while Microsoft’s gains are estimated between $13.30 billion and $25.06 billion.
- The calculations factor in not only Musk’s financial input but also non-monetary contributions such as technical insight and business advice.
- Molo compared Musk’s position to that of an early-stage startup investor who later realises exponential returns, arguing that OpenAI and Microsoft’s gains far exceed Musk’s initial contributions.
OpenAI reacts
Both OpenAI and Microsoft have consistently denied Musk’s allegations. Reacting to the latest lawsuit, OpenAI described it as baseless, stating that Musk’s claims are part of a broader pattern of harassment.
“Mr Musk’s lawsuit continues to be baseless and a part of his ongoing pattern of harassment, and we look forward to demonstrating this at trial.
“This latest unserious demand is aimed solely at furthering this harassment campaign,” OpenAI said in a statement.
The company added that it looks forward to disproving the allegations at trial, while Microsoft declined to comment on the latest filing.
OpenAI has also warned investors to expect more attention-grabbing claims from Musk as the trial approaches.
What you should know
OpenAI announced its restructuring in October, granting Microsoft a 27% ownership stake while maintaining nonprofit control over its for-profit arm.
Nairametrics reported that Musk had in 2024 filed a lawsuit against OpenAi and its Sam Altman and Greg Brockman for turning the company into a profit-making venture.
- Musk, who co-founded and was one of the early backers of OpenAI said the mission of the company was to be a non-profit that develops AI for the benefit of humanity.
- The Tesla CEO claims that Altman and Brockman convinced him to help found and bankroll the startup in 2015 with promises that it would be a non-profit focused on countering the competitive threat from Google.
- Musk’s latest filing indicates he also intends to seek punitive damages, potentially increasing the financial stakes of the case.
