Elon Musk is asking a federal court to stop OpenAI from becoming a profitable business.
Lawyers representing Musk, AI startup xAI, and former OpenAI board member Shivon Zilis filed the injunction against OpenAI on Friday. The injunction would also stop OpenAI from allegedly requiring its investors not to fund competitors, including xAI and others.
The latest court filings show an escalation in the legal dispute between Musk, OpenAI and CEO Sam Altman, as well as other longtime supporters and parties, including tech investors Reid Hoffman and Microsoft.
Musk initially sued OpenAI in March 2024 in San Francisco state court, before withdrawing the complaint and refiling it a few months later in federal court. Musk’s lawyer in according to the federal, led by Marc Toberoff in Los Angeles, argued in the complaint that OpenAI has violated Federal racketeering, or RICO, laws.
In mid-November, they expanded the complaint to include allegations that Microsoft and OpenAI have violated antitrust laws when Chat GPT-maker allegedly asked investors to agree not to invest in competing companies, including Musk’s newest startup, xAI.
“Elon’s fourth attempt, reworking the same baseless complaint, continues to be fruitless,” an OpenAI spokesperson said in a statement.
Microsoft declined to comment.
Musk’s lawyers are also asking the court to limit what they claim are undue business benefits due to OpenAI’s relationship with Microsoft, its main backer and partner.
OpenAI has emerged as one of the biggest startups in recent years, with ChatGPT being a major hit that has helped fuel large companies’ enthusiasm for AI and related big language models.
Since Musk announced the debut of xAI in July 2023, the newer AI business has released chatbot Grok and raised up to $6 billion in a $50 billion valuation, in part to buy 100,000 Nvidia Chips, CNBC reported earlier this month.
“Microsoft and OpenAI are now seeking to strengthen this dominance by cutting competitors’ access to investment capital (group boycott), while continuing to benefit from competitively sensitive information shared during the generative formative years of AI,” the lawyers wrote in the filing.
The lawyer wrote that the OpenAI terms require investors to agree to “boycott groups” that “block xAI’s access to important investment capital.”
The lawyer then added that OpenAI “can’t talk about the market as Frankenstein, which was put together from any form of company for the benefit of Microsoft’s money.”
In July, Microsoft gave up its observer seat on OpenAI’s board, although CNBC reported that the Federal Trade Commission will continue to monitor the two companies’ influence in the AI industry.
OpenAI originally debuted in 2015 as a non-profit and then in 2019, it changed to a so-called for-profit model, where the non-profit OpenAI is a governing entity for its for-profit subsidiary. It is in the process of being transformed into a public benefit company with a profit that can make it more attractive to investors. The restructuring plan will also allow OpenAI to retain its nonprofit status as a separate entity, CNBC previously reported.
Microsoft has invested nearly $14 billion in OpenAI but revealed in October as part of its fiscal first quarter report that it will record a loss of $1.5 billion in the current period largely due to the expected loss of OpenAI.
In October, OpenAI closed a major funding round that initially valued it at $157 billion. Thrive Capital led the funding while investors, including Microsoft and Nvidia, also participated.
OpenAI has faced increasing competition from startups such as xAI, Anthropic and tech giants such as Google. The generative AI market is predicted to reach $1 trillion in revenue in ten years, and business spending on generative AI is up 500% this year, according to new data from Menlo Ventures.
CNBC reached out to a lawyer for Musk on Friday. He did not respond to a request for comment.
– CNBC’s Hayden Field contributed reporting
Watch: Elon Musk is emerging as a key voice in Trump’s tech policy.
