Elon Musk sues OpenAI over breach of contract, straying from AI mission

Billionaire entrepreneur Elon Musk has sued ChatGPT-maker OpenAI and its CEO, Sam Altman, saying they abandoned the start-up’s original mission to develop artificial intelligence for the benefit of humanity and not for profit.

The lawsuit filed late on Thursday in the California Superior Court in San Francisco is a culmination of Musk's long-simmering opposition to the start-up he cofounded. OpenAI has since become the face of generative AI, partly due to billions of dollars in funding from Microsoft. Musk went on to found his own artificial intelligence start-up, xAI, launched last July.

Musk’s lawsuit alleges a breach of contract, saying Altman and co-founder Greg Brockman originally approached him to make an open source, nonprofit company, but the start-up established in 2015 is now focused on making money.

Musk said OpenAI’s three founders originally agreed to work on artificial general intelligence (AGI), a concept that machines could handle tasks like a human, but in a way that would “benefit humanity,” according to the lawsuit.

OpenAI would also work in opposition to Alphabet’s Google, which Musk said he believed was developing AGI for profit and would pose grave risks.

Instead, OpenAI “set the founding agreement aflame” in 2023 when it released its most powerful language model GPT-4 as essentially a Microsoft product, the lawsuit alleged.

Musk has sought a court ruling that would compel OpenAI to make its research & technology available to the public and prevent the start-up from using its assets, including GPT-4, for financial gains of Microsoft or any individual.

OpenAI’s top executives rejected several claims that Musk made in his lawsuit, Axios reported on Friday, citing a memo.

“It was never going to be a cakewalk,” Altman said in his note, also seen by Axios. “The attacks will keep coming.”

OpenAI, Microsoft and Musk did not respond to Reuters requests for comment on the lawsuit.

Musk is also seeking a ruling that GPT-4 and a new and more advanced technology called Q* would be considered AGI and therefore outside Microsoft’s licence to OpenAI.

Reuters in November was first to report on Q* and warnings from OpenAI researchers about a powerful AI discovery.

Musk, who runs electric vehicle maker Tesla, rocket maker SpaceX and social media platform X, decided to try to seize control of OpenAI from Altman and the other founders in late 2017, aiming to convert it into a commercial entity in partnership with Tesla, using the automaker’s supercomputers, said one source with knowledge of the situation.

Altman and others resisted, and Musk resigned, saying he wanted to focus on Tesla’s AI projects. He announced his exit to OpenAI staff in February 2018 during a meeting at which Musk called for OpenAI to increase its development speed, which one researcher called reckless, the source said.

Musk did not respond to request for comment about his exit from OpenAI.

Since then, Musk on several occasions has called for regulation of AI.

“We expect this will have zero impact on AI development inside or outside OpenAI, and would chalk it up to Musk seeking to get a slice of equity in a company he effectively founded but in which he holds no stake,” said Giuseppe Sette, president and co-founder of market research firm Toggle AI.

OpenAI’s tie-up with Microsoft is under antitrust scrutiny in the US and Britain following a boardroom battle last year that resulted in the sudden ouster and return of Altman and creation of a new temporary board.

The start-up plans to appoint new board members in March, the Washington Post reported on Thursday. Microsoft said in November it would have a non-voting observer seat.

Some legal experts said Musk’s allegations of breach of contract, based partly on an email between Musk and Altman, might not hold up in court.

While contracts can be formed through a series of emails, the lawsuit cites an email that appears to look like a proposal and a “one-sided discussion,” said Brian Quinn, a law professor at Boston College Law School.

“To the extent Musk is claiming that the single email in Exhibit 2 is the ‘contract,’ he will fall well short,” Quinn said.

Grok

Musk’s rival AI effort with xAI is made up of engineers hired from some of the top US technology firms he hopes to challenge, such as Google and Microsoft.

The start-up started rolling out its ChatGPT competitor Grok for Premium+ subscribers of social media platform X in December and aims to create what Musk has said would be a “maximum truth-seeking AI.”

According to xAI’s website, the start-up is a separate company from Musk’s other businesses, but will work closely with X and Tesla.

Musk has also made waves about his interest in artificial intelligence via Tesla. In January, he stirred controversy with Tesla shareholders, saying he felt uncomfortable growing the carmaker into a leader in AI and robotics unless he had at least 25% voting control of the company. Musk, who ranked second on the Forbes Real-Time Billionaires List on Friday, at an estimated worth of $210.6bn, owns about 13% of Tesla.

Musk, who has called AI a “double-edged sword”, was among experts and executives who last year called for a six-month pause in developing systems more powerful than OpenAI’s GPT-4, citing great risks to humanity and society.

Since ChatGPT’s debut, companies have adopted it for a range of tasks from summarising documents to writing computer code, setting off a race among Big Tech companies to launch offerings based on generative AI.

Reuters