Elon Musk sues Sam Altman, OpenAI for breach of contract

Breach of agreement

According to Musk, Altman and Brockman agreed that OpenAI would be the opposite of Google. Instead of being a for-profit entity, it would instead be a non-profit aimed at developing AGI for the benefit of humanity.

This founding agreement led to free and open models during the first few years of OpenAI.

Even after the agreement with Microsoft, in which OpenAI agreed to license its GPT-3 language model exclusively to Microsoft, OpenAI still published a detailed paper to the open source community explaining how people can create similar models.

However, Musk alleges that OpenAI breached the founding agreement in 2023 by releasing GPT-4 without providing any information on the model's designs.

Musk's lawsuit comes six years after he left OpenAI's board in 2018 and stopped contributing financially to the company about a year later.

However, in recent years, the conflict between Musk and Altman has grown, with Altman publicly saying there is a disagreement between the two.

Musk has also been publicly critical of the OpenAI-Microsoft partnership, posting online that OpenAI is no longer what he intended it to be.

Despite this, it seems strange that Musk will suddenly file a legal action against Altman and OpenAI, AI analyst Mark Beccue said.

"OpenAI has been on this path for over a year," Beccue said, adding that Musk has been aware of OpenAI's trajectory and the change in the company's mission. "It's nothing new. They've been trying to commercialize for a while."

Legal standing

Moreover, it's not clear what legal standing Musk has.

"I think he has an argument, whether it's legally sound or not," said Gregory Sichenzia, founding partner of law firm Sichenzia Ross Ference Carmel LLP. "I don't know if he'll prevail, but I think a court will hear it."

The case might be important for a court that is sensitive to social issues because of the type of generative AI technology OpenAI produces, Sichenzia said. A strong current of opinion in the tech community holds that generative AI has the potential to be extremely dangerous and even lead to the extinction of humans.

"For OpenAI to be coopted by Microsoft might be a very dangerous thing for everybody," he said. "That's what Elon Musk is saying. If you get a judge or a court that was sympathetic to that, I think they may hear it."

However, Musk cannot sue on behalf of society, said Johna Till Johnson, CEO and founder of Nemertes Research.

"I don't know that a court of law is going to agree that ... a breach of contract from years ago has somehow harmed society," Johnson said.

Another element of the lawsuit is that of unfair competition, according to Michael Bennett, AI law and policy advisor at Northeastern University.

This speaks to OpenAI's unusual structure, in which a for-profit company is embedded within a non-profit- entity.

Musk seems to argue that with Microsoft investing more than $13 billion in OpenAI, the AI company has an advantage over other vendors. This advantage is also over Musk's own XAI company, although Musk did not explicitly state that in his suit, Bennett said.

"If any one of these things stick -- the claims about unfair competition, breach of fiduciary duty -- he would have put kind of a speed bump in front of a competitor here and also kind of justify his long-standing concerns around AGI," he said.

Concerns about AI technology

Musk's lawsuit also points to a concern within the AI community surrounding AI ethics, Johnson said.

For OpenAI to be coopted by Microsoft might be a very dangerous thing for everybody.

"He's going to make hay on this, and I think it'll cause a lot of entities, organizations and governments pay attention to something they should be paying attention to," she said.

More researchers, government entities and businesses are also arguing for openness in the AI community, Bennett said.

But using a lawsuit to bring those concerns to light might be a waste of time, especially since generative AI technology is still in its infancy, Beccue said.

"It's so undecided where we're going to head with all generative AI and AI models," Beccue said. "There's no one model to rule them all. People tend to be throwing lawsuits out there and getting excited about what's valuable and what's not. We haven't monetized any of this stuff very much at all."

Musk's law firm declined to comment. OpenAI did not immediately respond to a request for comment.

Esther Ajao is a TechTarget Editorial news writer and podcast host covering artificial intelligence software and systems.