Elon Musk personally appeared in federal court, accusing OpenAI of "stealing from a nonprofit organization," and is seeking over $180 billion in damages while demanding the ouster of Altman. OpenAI fiercely retorted: this is merely a revenge battle from a competitor who failed to obtain rights. This four-week century-long showdown will directly influence the fate of OpenAI's trillion-dollar IPO.

Written by: Zhao Ying

Source: Wall Street Journal

The century-long legal battle between Musk and OpenAI officially commenced, with many seeing this lawsuit as one that will reshape the landscape of the artificial intelligence industry. The outcome could directly threaten OpenAI's valuation of hundreds of billions of dollars and its plans for an IPO.

On Tuesday, according to the Wall Street Journal, Musk appeared in federal court in Oakland, California, ready to testify. Upon sitting down, he gazed directly at the jury and characterized the lawsuit in the simplest of terms: "They will try to make this lawsuit seem very complicated, but it is actually very simple—stealing from a nonprofit organization is unacceptable."

He further warned that if he loses, "the United States may lose every nonprofit organization." Chief Judge Yvonne Gonzalez Rogers immediately intervened, reminding the jury that Musk's statement only represents his personal view and "carries no legal weight."

OpenAI retaliated strongly, accusing Musk of launching this "harassment strategy" after failing in his entrepreneurial competition and claiming the real motivation behind the lawsuit is Musk's inability to gain control over OpenAI and the fact that he has founded a competing company, xAI. This four-week trial will determine whether the corporate restructuring that OpenAI completed last year can be maintained and will directly affect its potential trillion-dollar IPO prospects.

Musk: I am the founder, Altman is the "thief"

Musk emphasized his core contribution to the founding of OpenAI in his testimony, stating that he proposed the idea, coined the name, recruited key talent, shared all he knew, and provided all the initial funding. He stressed that the initial purpose of OpenAI was "a charitable endeavor to benefit all humanity and should not allow any individual to profit from it."

Musk's lead attorney, Steven Molo, compared OpenAI to a nonprofit museum with a gift shop, stating, "The museum's shop cannot sell Picasso's paintings and then pocket the money." Molo also cited a photo of Musk meeting with former President Obama in 2015 at the White House, attempting to show the jury Musk's long-standing concern for AI safety issues.

Musk indicated that part of his reason for co-founding OpenAI was his worries about Google's attitude towards AI safety. In his testimony, he described a conversation with Google co-founder Larry Page—he asked Page about the risks of AI exterminating humanity, to which Page responded that as long as AI could persist, that outcome "didn't matter," and claimed Musk was "biased towards humanity." Musk described this response as "crazy," concluding that the world needs another AI company to counterbalance Google.

OpenAI strikes back: Musk turned hostile after being denied control

OpenAI's narrative starkly contrasts with Musk's. Its lead attorney, William Savitt, displayed a photo taken in 2016 at Greg Brockman's apartment, showing Ilya Sutskever and Sam Altman working in a makeshift living room, with Musk absent. Savitt stated that it was these co-founders who truly put in the "sweat equity," and Musk only "appeared occasionally," giving advice and "occasionally yelling at people for not making fast enough progress."

A court document was also presented, showing an internal email in which Musk had proposed gaining 55% of OpenAI's shares, while Altman, Brockman, and co-founder Ilya Sutskever would each get 7.5%. Savitt stated that the co-founders rejected this proposal, "refusing to hand the keys of artificial intelligence over to one person."

Savitt explicitly pointed out: "We are here today because Musk didn't get what he wanted from OpenAI... It's because he is now competing with OpenAI through xAI... As a competitor, he will stop at nothing to attack OpenAI." OpenAI also noted that the lawsuit was filed after the statute of limitations had expired and coincided perfectly with ChatGPT's great success and Musk's founding of xAI.

Focus of controversy: Donation commitments and control disputes

According to the Financial Times, Musk claimed in the lawsuit that he was induced to donate about $38 million to OpenAI, believing the organization would maintain its nonprofit nature. However, data disclosed during the trial revealed that Musk's actual donations were $25 million in cash and $12.5 million in rent, far below his promised $1 billion.

OpenAI cited a bar graph showing that total donations from other donors from 2016 to 2020 far exceeded Musk's contributions. Savitt emphasized, "There is no record of any commitment made to Musk that OpenAI would permanently remain a nonprofit," and "the only person who claims to have heard these commitments is Musk himself."

Musk acknowledged in his testimony that he did not oppose setting up a for-profit entity to raise funds, attract talent, and acquire computing power, but on the condition that the entity must serve the nonprofit parent. He stated, "For-profit entities taking most of the value from nonprofit organizations is unacceptable."

The remedies Musk seeks in this case are extremely radical, including: forcing OpenAI's for-profit division to pay over $180 billion in damages to its nonprofit parent, overturning the corporate restructuring completed last year, and ousting Altman and Brockman from company leadership.

If Musk wins, the corporate restructuring that OpenAI completed last October would be at risk of being overturned, and its potential trillion-dollar IPO plan and investors' massive return expectations would also be shaken. Microsoft's stake as the largest shareholder of OpenAI has also been cited as a defendant, accused of "assisting and abetting" OpenAI's actions, which Microsoft denies all accusations.

Legal experts generally believe Musk is at a disadvantage in this case. During the trial, Musk's political stance also caused hurdles during the jury selection process—some prospective jurors described him in the questionnaire as "garbage" and "a world-class jerk," with Chief Judge Gonzalez Rogers stating, "Many people do not like him, but that does not mean Americans cannot remain fair in judicial procedures."