Sam Altman’s attorney argued that a “simple” business disagreement occurred. Mr. Musk “wanted control,” Mr. Altman’s attorney explained. “When he couldn’t get it, he left. And now he wants to ‘rewrite’ history.” On the other side of the room, Elon Musk’s attorneys characterized it as a bait-and-switch. The nonprofit established by Sam Altman and his colleagues was intended to promote the public good. Instead, Musk’s lawyers say Microsoft’s R&D arm took the reins.
Yesterday, the trial started with jury selection. Today, opening statements were heard. Yesterday marked a very difficult time for OpenAI. The company appears to be readying to go public – but in order to do so, the corporation would need to convert fully to a for-profit model. If Musk prevails in this suit, it is possible that OpenAI would either not be able to proceed with an initial public offering (IPO), or if they did, it would likely be under circumstances less favorable than they had anticipated. This decision could also impact pending regulatory efforts regarding AI safety. As reported by CBS News, lawmakers are watching to see whether courts will hold AI companies accountable for their original promises to develop safe and accessible AI.
The primary focus of the litigation concerns discussions that occurred in 2015. At that point in time, Elon Musk claims to have provided over $44 million dollars to OpenAI based on express assurances made by Sam Altman and others associated with the organization that OpenAI would continue as a non-profit organization operating on an open source model. In addition, Musk claims that Altman assured him that OpenAI would prioritize safety and accessibility above all else; and that it would not allow financial considerations to become a priority.
In 2019, OpenAI converted into a for-profit model through creating a separate subsidiary. It claimed that the new for-profit subsidiary required funding to be competitive with major technology companies. However, the for-profit subsidiary now owns the majority of assets and operational activities associated with OpenAI. The remaining non-profit board provides little oversight. Microsoft has invested $13 billion in the for-profit subsidiary; giving it what Musk’s attorneys describe as de facto control.
“This is ultimately about whether you can promise people who give money to your organization that you’ll do something — and then completely reverse course and pursue something entirely different,” said Mark Lemley, a law professor at Stanford University who spoke with Al Jazeera about the implications of this trial. “If Musk wins this case, it could set a precedent for all AI research organizations.”
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The animosity that developed between Musk and Altman after Musk formed his competing AI company, X Corp., has continued to grow since 2023. Leaked excerpts from pre-trial depositions conducted with Altman by Musk’s attorneys stated that Altman told Musk during those interviews that Musk “wants to be CEO or have majority control” of OpenAI prior to Musk leaving OpenAI in 2018. Musk’s attorneys responded stating that Musk left due to OpenAI abandoning its original goals.
This trial may provide insight into how most of these organizations operate, especially considering how secretive they normally are. As part of the discovery process for the trial, the court directed both parties to produce internal communications from early days of OpenAI including meeting notes from board meetings and fundraising materials that could indicate how OpenAI — and possibly many of its competitors — actually function.
As mentioned earlier, timing could play a crucial role in determining the fate of OpenAI’s planned IPO. An IPO would require the conversion of OpenAI to a full for-profit structure. A court decision limiting or preventing such a transition may force OpenAI to decide between pursuing its IPO plans or maintaining its existing corporate status.
Both Musk and Altman testified via video conference today but neither testified in person. Neither party would comment outside of their formal submissions filed with the Court, with OpenAI arguing that Musk used litigation as a means to achieve a competitive advantage in developing AI models.
Jury deliberation will take approximately 21 days. The first week of testimony is expected to include input from individuals involved in the development of OpenAI at an early stage, along with testimony from some former employees who went on to start their own AI research organizations focused on safety.
A number of AI creators working on video applications should pay attention to whether the court differentiates between research conducted with open-source AI models versus models deployed commercially. Differentiation by the court could lead to differences in licensing requirements for AI models. Additionally, any ruling concerning non-profit governance could influence how research organizations structure agreements with commercial partners. Additionally, documents produced during discovery may reveal additional information regarding training data sources and testing procedures for ensuring safety. Ultimately, the case could create precedence regarding whether founders' documents create legally binding commitments toward the public.