The OpenAI logo is displayed on a mobile phone in front of a computer screen showing photos of Sam Altman (left) and Elon Musk on March 14, 2024.
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OpenAI fired back at one of its co-founders, Elon Musk, on Friday after the billionaire asked a federal court in November to block the ChatGPT maker from turning into a fully for-profit business.
exist a blog post On the OpenAI website, titled “Elon Musk Wants a For-Profit OpenAI,” the startup claims that in 2017, Musk “not only wanted, but actually created, a for-profit organization.” as a proposed new structure for the company.
“When he didn’t get majority ownership and full control, he walked away and told us we were going to fail,” OpenAI wrote in a blog post. “Now OpenAI is the leading artificial intelligence research lab that Elon runs. Owning a rival artificial intelligence company, he asked the court to prevent us from effectively pursuing our mission.”
Musk and xAI did not immediately respond to requests for comment.
According to a CNBC report on November 15, since Musk announced the debut of his OpenAI competitor xAI in July 2023, the new startup has released the Grok chatbot and raised up to $6 billion at a $50 billion valuation , partly used to purchase 100,000 Nvidia chips.
A member of OpenAI’s legal team told CNBC that Musk has questioned OpenAI’s non-profit model from day one.
Musk wrote in a November 2015 email to OpenAI CEO Sam Altman that OpenAI’s “architecture does not appear to be ideal,” according to screenshots shared in the blog post. He added that “receiving a salary from a nonprofit confuses incentives” and that “it may be better to have a standard C corporation and a parallel nonprofit.”
OpenAI co-founder Greg Brockman wrote in a text message conversation with former board member Shivon Zilis that a conversation he had with Musk “turned into talking about structure” and that Musk “initially It means the nonprofit is definitely in the right place, but may not be the right person right now,” according to a screenshot of the blog.
Musk forwarded an article about China’s artificial intelligence research facility strategy to Brockman and OpenAI co-founder Ilya Sutskever. According to the blog post, Musk wrote that China “will do whatever it takes to get the products we develop. This may be another reason to change course.”
Brockman agreed, writing that, according to the blog post, starting in 2018, OpenAI’s path needs to be “artificial intelligence research + hardware profitability.” Musk responded: “Let’s talk Saturday or Sunday. I have a tentative plan and I want you to execute it.”
According to the blog, Altman, Brockman, Musk and others negotiated the terms of the planned for-profit OpenAI in the fall of 2017, but due to issues such as ownership, control and CEO selection, There were disagreements and negotiations broke down. According to the screenshot, Musk initially proposed that he should “clearly have initial control” of the company, but said “that could change quickly” when the board has 12 to 16 members.
According to a screenshot in the OpenAI blog post, Musk created a public benefit company called “Open Artificial Intelligence Technology Company” in September 2017. Days later, OpenAI rejected Musk’s for-profit terms and offered to continue the conversation, but Musk responded that his proposal was “no longer on the table” and “the discussion has ended,” according to screenshots.
In January 2018, Musk proposed spinning off OpenAI into TeslaHis electric car company, according to the blog.
“The only path I can think of is a massive expansion of OpenAl and a massive expansion of Tesla Al. Maybe both at the same time. The former would require a significant increase in endowments and highly credible people on our board. The current board size The situation is dire. He added, “OpenAI is on a path to failure relative to Google. “
Screenshots show Brockman laying out a lengthy plan that included the idea that the company should “do its best to remain non-profit.” In February 2018, Musk resigned as co-chairman of OpenAI.
The complicated history of OpenAI
OpenAI debuted as a non-profit in 2015, then transitioned to a “limited profit” model in 2019, where the OpenAI non-profit is The management entity of its for-profit subsidiaries. On December 4, Altman said at the New York Times DealBook Summit that the company decided to adopt a profit cap structure in part because Musk stopped funding it.
Thanks in large part to the viral success of ChatGPT, which launched in November 2022, OpenAI has become one of the hottest, and sometimes most controversial, startups in the world. Since launching ChatGPT, the company’s valuation has climbed to $157 billion. OpenAI has raised about $13 billion from Microsoft and completed its latest round of $6.6 billion in October, led by Thrive Capital, with chip manufacturers Nvidia, SoftBank and other companies also participating.
The company also secured a $4 billion revolving credit facility, bringing its total liquidity to more than $10 billion. CNBC confirmed to a person familiar with the matter in September that OpenAI expected revenue to reach $3.7 billion this year and a loss of about $5 billion.
OpenAI is currently in the midst of a likely two-year transformation into an entirely for-profit public benefit company, which could make it more attractive to investors. According to previous reports by CNBC, the restructuring plan will also allow OpenAI to retain its non-profit status as an independent entity.
OpenAI faces increasing competition from startups like Musk’s xAI and Anthropic, as well as tech giants like Google. Amazon and Yuan. The generative artificial intelligence market is Expected to exceed US$1 trillion According to the latest data from Menlo Ventures, revenue has grown significantly in a decade, and enterprise spending on generative AI will surge by 500% by 2024.
A thorny legal battle
Lawyers representing Musk, his artificial intelligence startup xAI and Zilis On November 29, a preliminary injunction was filed against OpenAI.
In the preliminary injunction motion, Musk’s lawyers argued that OpenAI should be prohibited from “benefiting from incorrectly obtained competitively sensitive information or coordination through the Microsoft-OpenAI board linkage body.”
The latest court filings point to an escalating legal dispute between Musk, OpenAI and Altman, as well as other long-time parties and backers, including tech investor Reid Hoffman and Microsoft.
In March this year, Musk sued Open AI and its co-founders Altman and Brockman in a San Francisco court, alleging breach of contract and fiduciary duties. In the lawsuit, Musk claimed that the early OpenAI team was originally intended to develop general artificial intelligence “for the benefit of mankind,” but the project has been transformed into a for-profit entity mainly controlled by major shareholder Microsoft.
In June, Musk withdrew the complaint and later refiled the lawsuit in federal court. In the federal lawsuit, led by Marc Toberoff in Los Angeles, Musk’s lawyers argued in the complaint that OpenAI violated federal racketeering laws (RICO).
In November, they expanded their complaint to accuse Microsoft and OpenAI of violating antitrust laws when the ChatGPT maker allegedly asked investors to agree not to invest in rival companies, including Musk’s xAI.
“Microsoft and OpenAI now seek to solidify this dominance by cutting off competitors’ access to investment capital (a collective boycott), while continuing the competitive nature shared over the years from the formative years of generative AI,” the lawyers wrote in a statement. They added that the terms OpenAI required investors to agree to amounted to a “collective boycott” and “prevented xAI from obtaining necessary investment capital.”
Altman denied at the DealBook Summit that OpenAI investors are prohibited from investing in competitors. Altman said investors are welcome to do so, but the company will cease their “information rights” such as sharing its research roadmap and other materials.
Microsoft has invested nearly $14 billion in OpenAI, but revealed in October that it would record a loss of $1.5 billion in the current period, mainly due to the expected losses of the artificial intelligence startup.
Microsoft gave up its observer seat on OpenAI’s board of directors in July. However, according to CNBC, the Federal Trade Commission will continue to monitor the influence of these two companies on the artificial intelligence industry.
—CNBC’s Lora Kolodny contributed reporting.
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