On this picture, the emblem of OpenAI is displayed on a cell phone in entrance of a pc display displaying the images of Elon Musk and Sam Altman, in Ankara, Turkey, on March 14, 2024.
Muhammed Selim Korkutata | Anadolu | Getty Pictures
Elon Musk is asking a federal court docket to cease OpenAI from changing into a completely for-profit enterprise.
Attorneys representing Musk, his AI startup xAI, and former OpenAI board member Shivon Zilis filed for a preliminary injunction towards OpenAI on Friday. The injunction would additionally cease OpenAI from allegedly requiring its traders to chorus from funding opponents, together with xAI and others.
The most recent court docket filings characterize an escalation within the authorized feud between Musk, OpenAI and its CEO Sam Altman, in addition to different long-involved events and backers together with tech investor Reid Hoffman and Microsoft.
Musk had initially sued OpenAI in March 2024 in a San Francisco state court docket, earlier than withdrawing that criticism and refiling a number of months later in federal court docket. Attorneys for Musk within the federal go well with, led by Marc Toberoff in Los Angeles, argued of their criticism that OpenAI has violated federal racketeering, or RICO, legal guidelines.
In mid-November, they expanded their criticism to incorporate allegations that Microsoft and OpenAI had violated antitrust legal guidelines when the Chat GPT-maker allegedly requested traders to comply with not spend money on rival firms, together with Musk’s latest startup, xAI.
Microsoft declined to remark.
 Of their movement for preliminary injunction, attorneys for Musk argue that OpenAI needs to be prohibited from “benefitting from wrongfully obtained competitively delicate data or coordination by way of the Microsoft-OpenAI board interlocks.”
“Elon’s fourth try, which once more recycles the identical baseless complaints, continues to be completely with out benefit,” an OpenAI spokesperson stated in an announcement.
OpenAI has emerged as one of many greatest startups in recent times, with ChatGPT turning into a significant hit that has helped usher huge company enthusiasm over AI and associated massive language fashions.
Since Musk introduced xAI’s debut in July 2023, his newer AI enterprise has launched its Grok chatbot and is elevating as much as $6 billion at a $50 billion valuation, partially to purchase 100,000 Nvidia chips, CNBC reported earlier this month.
“Microsoft and OpenAI now search to cement this dominance by slicing off opponents’ entry to funding capital (a bunch boycott), whereas persevering with to profit from years’ price of shared competitively delicate data throughout generative AI’s adolescence,” the legal professionals wrote within the submitting.
The attorneys wrote that the phrases OpenAI requested traders to comply with amounted to a “group boycott” that “blocks xAI’s entry to important funding capital.”
The legal professionals later added that OpenAI “can’t lumber in regards to the market as a Frankenstein, stitched collectively from whichever company types serve the pecuniary pursuits of Microsoft.”
In July, Microsoft gave up its observer seat on OpenAI’s board, though CNBC reported that the Federal Commerce Fee would proceed to observe the affect of two firms over the AI trade.
FTC Chair Linda Khan introduced at first of the 12 months that the federal company would provoke a “market inquiry into the investments and partnerships being shaped between AI builders and main cloud service suppliers.” A few of the firms that the FTC talked about as a part of the research included OpenAI, Amazon, Alphabet, Microsoft and Anthropic.
Within the submitting, attorneys for Musk additionally argue that OpenAI needs to be prohibited from “benefitting from wrongfully obtained competitively delicate data or coordination by way of the Microsoft-OpenAI board interlocks.”
OpenAI initially debuted in 2015 as a non-profit after which in 2019, transformed right into a so-called capped-profit mannequin, through which the OpenAI non-profit was the governing entity for its for-profit subsidiary. It is within the means of being transformed into a completely for-profit public profit company that might make it extra enticing to traders. The restructuring plan would additionally permit OpenAI to retain its non-profit standing as a separate entity, CNBC beforehand reported.
Microsoft has invested almost $14 billion in OpenAI however revealed in October as a part of its fiscal first-quarter earnings report that it could document a $1.5 billion loss within the present interval largely as a result of an anticipated loss from OpenAI.
In October, OpenAI closed a significant funding spherical that valued the startup at $157 billion. Thrive Capital led the financing whereas traders, together with Microsoft and Nvidia, additionally participated.
OpenAI has confronted growing competitors from startups akin to xAI, Anthropic and tech giants akin to Google. The generative AI market is predicted to high $1 trillion in income inside a decade, and enterprise spending on generative AI surged 500% this 12 months, based on current knowledge from Menlo Ventures.
CNBC reached out to attorneys for Musk on Saturday. They didn’t reply to requests for remark.
— CNBC’s Hayden Discipline contributed reporting
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