Elon Musk’s $134-billion fight with OpenAI escalates with investigation call

OpenAI urged the attorneys general of California and Delaware to investigate potential “improper and anti-competitive behavior” by Elon Musk in his efforts to block OpenAI from restructuring as a for-profit company.

Jason Kwon, chief strategy officer at OpenAI, said in a Monday letter to both state officials that Musk “has repeatedly attempted — and failed — to wrest control of the nonprofit for his personal gain” in a bid to take control over the future of artificial intelligence.

The letter comes weeks before Musk is set to face off in a trial against OpenAI and Microsoft Corp. over the billionaire’s allegations that the startup betrayed its founding mission as a public charity by taking billions of dollars in backing from the software giant and making plans to convert to a for-profit business. Musk is seeking as much as $134 billion in damages from OpenAI and Microsoft.

Kwon mentions the looming trial in his letter, saying that the case could undermine agreements that both states reached with OpenAI when it finalized its restructuring plan in October.

“Mr. Musk’s lawsuit is not just against OpenAI; it is about whether there is room in the industry for a company subject to the mission and structure outlined in the October agreements, or whether that ground must be ceded to Mr. Musk and his co-conspirators,” Kwon said.

OpenAI, the maker of ChatGPT, said when it announced its restructuring that it had given a 27% ownership stake to Microsoft in a transition that will keep the startup’s nonprofit arm in control of its for-profit operations.

California Atty. Gen. Rob Bonta and Delaware Atty. Gen. Kathy Jennings conducted reviews and ultimately decided not to object to the for-profit shift after OpenAI made certain commitments to both leaders about how the company’s governance structure would function.

A spokesperson for Bonta said his office is reviewing the letter. A representative for Jennings and a lawyer for Musk didn’t immediately respond to requests for comment.

The letter was reported earlier by CNBC.

Musk co-founded OpenAI with Sam Altman and others in 2015, but the former business partners have become bitter foes in recent years. Musk left OpenAI’s board in 2018 and in 2023 co-founded the artificial intelligence company xAI, which has become one of OpenAI’s main rivals. Last year, OpenAI rejected Musk’s unsolicited bid to acquire the assets of the nonprofit that controls the company for $97.4 billion.

Mekelburg writes for Bloomberg.