This analysis was first published in SvD Näringsliv, in Swedish, on March 4th, 2024. This piece was translated from Swedish by Claude. Some phrasing may differ from a human translation.
OpenAI is being sued by co-founder Elon Musk. He claims to want to preserve the company’s original non-profit ambitions. But Musk has other reasons to want to slow down what has now become his competitor.
The complexity of the case is revealed immediately in the lawsuit Elon Musk has filed with the California court system. On one side stands “Elon Musk, an individual.” On the other: OpenAI’s leaders Sam Altman and Greg Brockman — and eight different OpenAI entities, all with names along these lines: OpenAI LP, OpenAI LLC, and OpenAI GP LLC.
Does all of this really exist for something that was meant to be a non-profit aimed at doing good for the world through artificial intelligence? Musk doesn’t think so — and is now suing them.
Elon Musk was one of OpenAI’s original founders and among its earliest and largest funders. It is true that the company subsequently restructured to include a more commercial entity. Hence all those interlocking company names.
But this transformation happened back in 2019. So why is Musk only suing now, five years later?
The first — and most charitable — interpretation is that it is only now that OpenAI has truly broken through at scale. AI development is accelerating in step with the enormous investments being made in the field. The risks that some AI researchers have warned about may therefore be becoming more urgent.
OpenAI was originally set up to ensure that AI technology is used with good intent and in a way that benefits humanity. Musk has been clear about his desire to colonise Mars as an alternative home for humanity. If he genuinely fears that AI could be used in the wrong way, this is the moment to try to stop it.
Working against this interpretation, however, is reporting in The New York Times suggesting that as recently as 2018, Musk was encouraging OpenAI to accelerate its development pace in ways that one researcher there considered “reckless.”
The second reason is that Musk now competes directly with OpenAI through his own companies. The publication Semafor has previously reported that Musk attempted to take over OpenAI in 2018 following a dispute with Sam Altman. When that failed, Musk withdrew a large planned donation.
Several years later, Musk now runs multiple companies with AI connections — including Tesla and the newer project xAI. Interestingly, xAI has been registered as a commercial “benefit corporation,” a legal form designed to benefit more than just its shareholders — a kind of hybrid between the non-profit and the commercial. Regardless of how xAI is structured, it is a direct competitor to OpenAI. Slowing down or forcing OpenAI to restructure could meaningfully benefit Musk’s own ventures.
The third reason is a question of power. Access to AI services is growing explosively, but the underlying systems that provide them are few. At present, it is primarily Google, OpenAI together with Microsoft, Anthropic, Meta, and a handful of others that underpin almost all AI services. This means that the concentration of power is very high — resembling the position that the tech giants have occupied on the internet for the past fifteen years.
Musk is not one of those power players today. And it must sting that he helped fund something that now generates both profits and a formidable competitive position for several of his rivals.
Neither Microsoft nor OpenAI accepts Musk’s characterisation of their relationship. They argue it is a commercial partnership, but that Microsoft cannot control what OpenAI does — and that the non-profit element of OpenAI remains intact as the legal entity where the governing board sits.
It is easy to be idealistic about the current development of AI and how one wants it to be used. But the reason OpenAI went to Microsoft for money in the first place was that the operation required enormous resources — as we can see not least from chipmaker Nvidia’s extraordinary rise. Had OpenAI been funded through donations, it would almost certainly not have achieved the results we see today, nor would it have accelerated competitors’ appetite for investment. Billions of dollars have been committed to this development.
Elon Musk was early in recognising the potential of artificial intelligence. It is easy to see that he would have liked a larger hand in shaping it. Now he has another chance to get that — not through technology, but through the courts. It is a move that carries a whiff of desperation. A San Francisco judge will decide whether he succeeds.
