OpenAI has countered Elon Musk’s recent lawsuit, emphasizing that the billionaire had previously advocated for the company’s shift to a for-profit structure.
Musk, one of OpenAI’s co-founders, has accused the AI company of abandoning its nonprofit roots, filing a fresh lawsuit in August after withdrawing an earlier complaint.
Early discussion and Governance Disputes
In a Dec. 13 blog post and court filings, OpenAI highlighted Musk’s early involvement in shaping its structure and noted that he had raised concerns about operating as a nonprofit before the organization’s 2015 launch.
Musk claimed in an email that Musk was a “standard C corp with a parallel nonprofit”It could be more efficient. OpenAI argued that this demonstrates Musk’s initial support for flexibility in its organizational approach.
Musk revisited his proposal in 2017 after OpenAI’s significant advancements.
In one exchange, co-founder Greg Brockman noted that Musk viewed a nonprofit as potentially unsuitable for OpenAI’s ambitions, a sentiment Brockman and other leaders reportedly shared.
Musk wanted to be in control of the entity. OpenAI reported that Musk instructed his team of financial experts to form a public-benefit corporation with his guidance, asking for majority ownership, board dominance and CEO.
These terms were rejected by OpenAI’s leadership, including CEO Sam Altman, leading to Musk’s departure from the board in 2018.
Transition and funding for the For-profit sector
OpenAI, in 2019, announced an capped profit structure that is managed by its non-profit arm.
According to the organization’s statement, this decision was motivated by the necessity to obtain substantial funding for the AI landscape to rapidly evolve. The change was followed by major investments including substantial backing from Microsoft.
OpenAI’s legal team also disclosed that Musk was offered equity in the capped-profit entity on multiple occasions but declined. They noted Musk’s prior statement in 2019 asking OpenAI to explicitly confirm that he had no financial interest in its for-profit operations.
Musk has positioned xAI, which he launched in 2023 as a direct competitor of OpenAI. xAI has reportedly raised billions in funding and introduced new models to challenge OpenAI’s generative AI tools like ChatGPT.
Musk’s August lawsuit argues that OpenAI’s transition betrayed its founding principles, but the organization maintains that Musk’s claims overlook his early role in advocating for structural changes.
OpenAI, xAI and other AI companies are fighting for supremacy in a competitive AI field.
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