OpenAI has launched a legal counterattack against Elon Musk, accusing the tech mogul of orchestrating a strategic campaign to damage the organization and its progress in artificial intelligence.
A Legal Showdown Between AI Giants
In new court filings submitted to the U.S. District Court for the Northern District of California, OpenAI claims that Musk has waged a calculated effort to derail the company after leaving the organization in 2018. The lawsuit alleges that Musk, now spearheading rival firm xAI, has engaged in a series of unfair business practices aimed at undermining OpenAI’s reputation, operations, and investor relationships.
OpenAI’s legal team describes Musk’s actions as a “relentless and malicious campaign” designed to slow down OpenAI’s momentum and siphon influence away from the AI innovator. The company is seeking an injunction to halt Musk’s conduct and monetary compensation for damages already incurred.
From Founding Partner to Fierce Rival
The legal documents retrace the origins of OpenAI, founded in 2015 with Musk as a key figure. Alongside Sam Altman and Greg Brockman, Musk committed to building a non-profit AI lab aimed at ensuring artificial general intelligence (AGI) would benefit humanity as a whole. He initially pledged $1 billion in funding, though OpenAI now asserts that much of that commitment was never fulfilled.
By 2018, tensions escalated when Musk pushed for full control of the organization or its integration into Tesla. OpenAI’s leadership, including Chief Scientist Ilya Sutskever, rejected the proposal, warning that such a move could create an “AGI dictatorship.” Musk subsequently exited the company, predicting its failure.
Restructuring and Accusations of Retaliation
To sustain growth and innovation, OpenAI restructured in 2019, forming a capped-profit arm to attract external investment while maintaining non-profit oversight. The organization emphasizes that Musk was notified of the shift and declined equity participation without raising objections.
Following breakthroughs like GPT-3, ChatGPT, and GPT-4, OpenAI saw explosive growth—successes the company alleges triggered Musk’s retaliatory tactics. These include:
- Quietly launching xAI in March 2023
- Backing a moratorium on advanced AI development shortly thereafter
- Requesting internal OpenAI documents under “false pretenses”
- Using his social platform X to publicly attack OpenAI’s credibility
- Filing lawsuits based on what OpenAI calls “baseless” claims of a founding agreement breach
- Pressuring regulators to intervene against OpenAI
- Leading a purported $97.375 billion ‘sham’ acquisition offer in early 2025
OpenAI claims this bid was a strategic stunt lacking real financing, designed to disrupt fundraising efforts, internal restructuring, and investor confidence as the company considers transitioning into a Public Benefit Corporation (PBC).
Legal Claims and Broader Implications
The lawsuit includes two major counterclaims:
- Unfair competition: The acquisition bid is characterized as fraudulent and disruptive under California law
- Tortious interference: OpenAI alleges Musk intentionally sabotaged its economic relationships and future prospects
According to the filing, Musk’s coordinated actions have forced OpenAI to divert significant resources, inflicting reputational and operational harm. The company also raised concerns about xAI’s safety standards, referencing reports that its AI model, Grok, has generated harmful and misleading content.
OpenAI’s countersuit follows Musk’s own legal filing accusing the company of betraying its founding principles. However, OpenAI frames Musk’s motivations as personal rather than principled, alleging that he aimed to regain control over a project he could no longer steer.
This high-stakes legal clash not only highlights corporate rivalry but also raises questions about governance, ownership, and ethical responsibility in the rapidly evolving AI sector. For a broader view on how generative AI is influencing both policy and public trust, explore how generative AI is reshaping business, governance, and society.
With billions of dollars and the future of AGI leadership on the line, the battle between OpenAI and Elon Musk is poised to shape the next chapter in artificial intelligence development.
