Elon Musk files for injunction to halt OpenAI’s transition to a for-profit

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In a dramatic turn of events, Elon Musk has filed a motion for a preliminary injunction against OpenAI, its co-founders, and major investor Microsoft, seeking to block OpenAI’s transition to a fully for-profit entity. The filing, submitted late Friday in the U.S. District Court for the Northern District of California, alleges anticompetitive practices, self-dealing, and a departure from OpenAI’s original nonprofit mission.

Musk’s legal team accuses OpenAI and its key collaborators of suppressing competition, including his own AI startup, xAI, by discouraging investors from funding rival companies. The motion also alleges that OpenAI’s partnership with Microsoft has enabled the misuse of sensitive information and allowed questionable transactions benefiting individuals with financial interests in OpenAI’s operations.

Key allegations in the injunction include:

• Investor Suppression: Claims that OpenAI pressured its investors to avoid funding competitors, including xAI.

• Self-Dealing: Allegations that OpenAI’s leadership used Stripe, a company CEO Sam Altman has financial interests in, as its payment processor.

• Governance Shift: Musk seeks to prevent OpenAI from completing its transformation into a fully for-profit entity and transferring material assets.

Musk’s Stance

Musk, a co-founder of OpenAI who left the organization in 2018 over disagreements about its direction, argues that OpenAI has strayed far from its nonprofit roots. In his filing, Musk claims “irreparable harm” will occur unless OpenAI’s current trajectory is paused.

“An injunction to preserve what is left of OpenAI’s nonprofit character, free from self-dealing, is the only appropriate remedy,” Musk’s attorneys wrote.

They also argue that OpenAI’s growing reliance on private investments, especially from Microsoft, undermines its commitment to the public good. Musk claims OpenAI is exploiting his earlier $44 million donation — made under the premise of developing AI for humanity — to drive profits instead.

OpenAI’s Defense

OpenAI has pushed back strongly, dismissing Musk’s claims as unfounded and repetitive.

“Elon’s fourth attempt, which again recycles the same baseless complaints, continues to be utterly without merit,” an OpenAI spokesperson said.

OpenAI’s defenders argue that the shift to a for-profit structure is essential to sustain its rapid growth and costly AI research. The organization, which introduced the game-changing ChatGPT, reportedly spends billions on training and maintaining its models, making significant external investment necessary.

Microsoft, OpenAI’s largest backer, has poured nearly $13 billion into the company and has played a key role in providing cloud infrastructure to train its advanced AI models.

What’s at Stake?

This legal battle pits two competing visions for AI against one another. Musk argues that AI must remain accessible to all and free from corporate self-interest. Meanwhile, OpenAI contends that adapting to a for-profit model is the only way to maintain its competitive edge in the rapidly evolving AI industry.

At the core of the dispute lies the question: Can AI development balance altruism with the financial realities of building groundbreaking technology?

The court’s decision could have far-reaching implications not just for OpenAI but for the future of AI governance. With billions of dollars and the direction of AI innovation at stake, this is one legal battle the tech world will be watching closely.