OpenAI counter-sues Elon Musk for attempts to ‘take down’ AI rival
OpenAI counter-sues Elon Musk for attempts to ‘take down’ AI rival
OpenAI Strikes Back: Legal Action Against Elon Musk and xAI
OpenAI has launched a legal counterattack against its co-founder Elon Musk, accusing him and his rival company, xAI, of orchestrating a “relentless” and “malicious” campaign to undermine the organization.
In a lawsuit filed with the U.S. District Court for the Northern District of California, OpenAI alleges Musk turned against the company after leaving it years ago, unable to accept its success after he had “abandoned and declared [it] doomed.”
OpenAI is seeking an injunction to halt what it describes as Musk’s “unlawful and unfair actions,” along with damages for harm already inflicted.
The Fallout Between Musk and OpenAI
The lawsuit revisits OpenAI’s founding in 2015, originally envisioned by Sam Altman and Greg Brockman as a nonprofit AI lab committed to developing artificial general intelligence (AGI) for the benefit of humanity. Musk was an early supporter, joining the nonprofit board and pledging $1 billion.
However, tensions escalated between 2017 and 2018. OpenAI claims Musk demanded “absolute control” or sought to fold the venture into Tesla. These demands were rejected by Altman, Brockman, and then-Chief Scientist Ilya Sutskever, who warned Musk against creating an “AGI dictatorship.” Musk quit in February 2018, allegedly predicting OpenAI would fail and choosing to pursue AGI through Tesla. Notably, OpenAI claims Musk never fulfilled his full donation pledge.
Restructuring and Rising Tensions
To manage soaring compute and talent costs, OpenAI restructured in 2019, forming a “capped-profit” entity to attract investment while preserving nonprofit oversight. Musk declined equity in the new structure and raised no objections at the time.
Since then, OpenAI points to its milestones—GPT-3, ChatGPT, GPT-4—as proof of success without Musk. These achievements, the company alleges, provoked Musk’s hostile campaign.
Alleged Campaign of Disruption
OpenAI outlines a series of alleged actions by Musk aimed at undermining the organization:
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xAI Launch: Musk quietly founded competing firm xAI in March 2023.
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AI Moratorium Call: Days later, he backed a call to pause development of AI beyond GPT-4—seen by OpenAI as a ploy to stall them while others, notably Musk, caught up.
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Records Demand: Musk allegedly demanded confidential OpenAI documents under false pretenses.
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Public Attacks: Musk used his platform X (formerly Twitter) to brand OpenAI a “lie,” “evil,” and a “total scam.”
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Lawsuits: Musk filed lawsuits, including the ongoing federal case based on what OpenAI calls baseless claims of a “Founding Agreement.”
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Regulatory Pressure: Musk allegedly pushed state Attorneys General to investigate OpenAI.
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Sham Bid: In February 2025, Musk led a consortium offering $97.375 billion for OpenAI’s assets—dismissed by OpenAI as a “sham” lacking real financing, meant to disrupt their operations and investor relations. One investor involved reportedly admitted the goal was to gain “discovery.”
OpenAI’s Counterclaims
OpenAI brings two main counterclaims against Musk and xAI:
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Unfair Competition: Alleging Musk’s bid and tactics violate California laws and unfairly benefit xAI.
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Tortious Interference: Accusing Musk of deliberately sabotaging relationships with OpenAI’s investors, employees, and partners.
OpenAI argues that Musk’s actions have diverted vital resources and caused significant damage, endangering its mission and long-term stability. The filing also flags safety concerns about xAI’s chatbot, Grok, citing its history of producing harmful and misleading content.
