Elon Musk is asking a federal court to dam OpenAI from becoming a completely for-profit company.
Lawyers representing Musk, his AI startup xAI and former OpenAI board member Shivon Zilis filed for a preliminary injunction against OpenAI on Friday. The injunction would also stop OpenAI from allegedly requiring its investors to stop funding competitors, including xAI and others.
The latest court filings represent an escalation in legal battles between Musk, OpenAI and its CEO Sam Altman, in addition to other long-time involved parties and supporters, including technology investor Reid Hoffman and Microsoft.
Musk originally sued OpenAI in a San Francisco state court in March 2024, before withdrawing that lawsuit and refiling it in federal court a couple of months later. Lawyers for Musk IThe federal lawsuit led by Marc Toberoff in Los Angeles argued in his criticism that OpenAI violated federal racketeering laws (RICO).
In mid-November, they expanded their criticism to incorporate allegations that Microsoft and OpenAI violated antitrust laws when the chat GPT maker allegedly asked investors to agree not to speculate in rival firms, including Musk's latest startup, xAI.
“Elon’s fourth attempt, once again recycling the same baseless complaints, stands.” completely unfounded“An OpenAI spokesperson said in a statement.
Microsoft declined to comment.
Musk is also asking the court to restrict allegedly improper business advantages arising from OpenAI's close relationship with Microsoft, its key supporter and partner.
OpenAI has become one of the largest startups in recent years, with ChatGPT becoming a major success that has helped generate enormous enthusiasm among companies for AI and related large language models.
Since Musk announced xAI's debut in July 2023, his newer AI company has released its Grok chatbot and is raising up to $6 billion at a $50 billion valuation, in part to buy 100,000 Nvidia chips, CNBC reported earlier this month.
“Microsoft and OpenAI are now seeking to consolidate this dominance by denying competitors access to investment capital (group boycott) while continuing to benefit from years of exchange of competitive information during the formative years of generative AI,” the lawyers wrote within the study filing.
The lawyers wrote that the terms OpenAI asked investors to comply with amounted to a “group boycott” that “blocks xAI’s access to essential investment capital.”
The lawyers later added that OpenAI “cannot hang around in the market as a Frankenstein, composed of any corporate entity that serves Microsoft's financial interests.”
In July, Microsoft gave up its observer seat on OpenAI's board, although CNBC reported that the Federal Trade Commission would proceed to observe two firms' influence on the AI industry.
OpenAI originally began as a nonprofit organization in 2015 after which transitioned to a capped-profit model in 2019, where the OpenAI nonprofit organization was the executive entity for its for-profit subsidiary. It is currently being converted into a completely for-profit nonprofit corporation, which could make it more attractive to investors. The restructuring plan would also allow OpenAI to take care of its nonprofit status as a separate entity, CNBC previously reported.
Microsoft has invested nearly $14 billion in OpenAI, but said in October as a part of its fiscal first quarter earnings report that the corporate would post a lack of $1.5 billion in the present period, largely as a consequence of expectations lack of OpenAI.
In October, OpenAI closed a big funding round that valued the startup at $157 billion. Thrive Capital led the financing, while investors including Microsoft and Nvidia also participated.
OpenAI faces increasing competition from startups comparable to xAI, Anthropic and technology giants comparable to Google. The generative AI market is It is predicted to be over $1 trillion According to recent data from Menlo Ventures, revenue grew inside a decade and company spending on generative AI increased 500% this yr.
CNBC reached out to Musk's lawyers on Saturday. They didn’t reply to requests for comment.
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