The most intense commercial dispute between two leading AI giants in Silicon Valley will be formally decided by a court this week. The lawsuit between Elon Musk and Sam Altman is scheduled to commence in the U.S. District Court for the Northern District of California, with jury selection starting on Monday. Opening statements and witness testimonies are anticipated to begin on Tuesday.
Musk is petitioning the court to revert OpenAI to a fully non-profit research institution. He is also seeking damages totaling $134 billion from OpenAI and Microsoft, alongside the removal of Altman and OpenAI President Greg Brockman from their positions.
A victory for Musk could potentially compel OpenAI to reverse the for-profit restructuring completed in October of last year. Altman views this restructuring as essential for OpenAI to fulfill its mission of achieving Artificial General Intelligence (AGI) and securing large-scale funding.
According to Dorothy Lund, a law professor at Columbia University, the risks for OpenAI are extraordinarily high, bordering on existential. Any of the remedies Musk is seeking could spell the end for OpenAI.
OpenAI currently holds a valuation of $852 billion and is preparing for an Initial Public Offering that could rank among the largest in history. Analysis from Bloomberg Intelligence estimates Musk's probability of success in this trial at 60 percent.
A Decade-Long Dispute Reaches the Courtroom
Musk and Altman co-founded OpenAI over a decade ago. However, their relationship deteriorated completely after Musk's departure in 2018, escalating into open hostility. In this lawsuit, Musk alleges that Altman and other OpenAI executives abandoned the company's altruistic founding principles. He contends they leveraged approximately $13 billion in investment from Microsoft to drive a for-profit transformation, primarily for personal benefit.
OpenAI and Altman have counter-argued that Musk's actions are intended to suppress competition, clearing a path for xAI, the AI company he co-founded in 2023. They have also filed a countersuit regarding Musk's alleged years of "harassment," though this countersuit is not part of the current trial.
Musk initially presented 26 claims in November 2024, but many have since been dismissed, withdrawn, or stayed. Just one week before the trial, Musk voluntarily dropped two fraud allegations. The claims ultimately being presented to the jury focus on two key issues: breach of charitable trust and unjust enrichment.
OpenAI is at a critical juncture. In 2023, Altman was briefly ousted, an event that nearly led to the collapse of the parent company of ChatGPT. At that time, a coalition of investors and employees pressured the board to reinstate him. Should this lawsuit trigger similar instability, it could create opportunities for competitors, including xAI, the developer behind the Grok chatbot, which is owned by Musk.
A win for Musk would also result in significant losses for Microsoft. Following OpenAI's restructuring, Microsoft acquired a 27 percent stake in the company.
Conflicting Arguments: Who is Upholding the Mission?
OpenAI has countered that Musk's allegations are unfair, arguing that he initially supported the move towards a for-profit model and even once proposed that Tesla Motors acquire OpenAI.
Microsoft maintains that its investment in OpenAI is a crucial source of funding for cutting-edge technology research and development, denying any role in "aiding and abetting" a deviation from OpenAI's founding mission.
Hundreds of pages of evidence have been submitted for the trial. This includes text messages between Musk and Shivon Zilis discussing his relationship with OpenAI, as well as early emails exchanged between Musk, Altman, Brockman, and Ilya Sutskever.
According to Bloomberg, the trial will proceed in two phases. The first phase will involve the jury determining the validity of Musk's claims against the defendants: OpenAI, Altman, Brockman, and Microsoft. The second phase will determine the appropriate remedies based on the jury's findings.
After testimonies conclude, the jury will issue an "advisory verdict." The final judgment and remedial measures will be determined by Judge Gonzalez Rogers, who will consider the jury's opinion.
Potential Gains Regardless of Outcome
Reports indicate that both Musk and Altman are expected to testify during the first phase of the trial. Other potential witnesses include Microsoft CEO Satya Nadella, Musk's long-time business associate Jared Birchall, former OpenAI chief scientist Ilya Sutskever, and several current and former OpenAI employees and board members, including Shivon Zilis, with whom Musk has four children.
Bloomberg Intelligence analysts Matthew Schettenhelm and Tamlin Bason assess Musk's chance of winning the trial at 60 percent, but also note potential vulnerabilities in his case during any subsequent appeals.
Even if Musk loses the case, it may not be without benefit for him. Dorothy Lund points out that the trial process will force a significant amount of OpenAI's internal operational information into the public domain. Lund stated that some of this information could be highly valuable for his private endeavors in the AI race. In a sense, the fact that the lawsuit has proceeded to trial represents a significant victory for Musk in terms of information acquisition.
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