OpenAI, maker of popular Artificial Intelligence (AI) chatbot ChatGPT, has filed a countersuit against Elon Musk, alleging that he has used every tool available to harm the company and disrupt its operations.
The filing, submitted to a federal judge, seeks to block Musk from taking further “unlawful and unfair” actions against the company. It is understood that Musk who co-founded OpenAI in 2015 with Sam Altman, has sued OpenAI twice in the past year to prevent it from straying from its original nonprofit mission.
OpenAI claims that if it does not transition to a for-profit entity by the end of 2025, it risks losing a portion of the $40 billion it recently raised. Recall that last month, the company announced it had closed what amounts to the largest private tech funding round on record. The $40 billion financing led by SoftBank, valued the ChatGPT maker at $300 billion.
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In its countersuit, OpenAI accuses Musk of orchestrating a “sham” $97.375 billion bid to acquire the company, timed to scare off legitimate investors and destabilize its fundraising efforts. In February this year, a group of investors led by Elon Musk offered to buy control of OpenAI. The consortium of investors includes Musk, his startup xAI, and long-time investors in his other businesses including, Baron Capital Group, Valor, Atreides, Vy Capital, Joe Lonsdale’s 8VC, and an investment vehicle led by Endeavor CEO Ari Emanuel.
Meanwhile, Musk’s $97.4 billion bid to acquire OpenAI, contradicts his legal claims that the startup’s assets can’t be transferred away for private again. The company however alleges that the offer was baseless, lacking evidence of financing, and seemingly inspired by a “comedic reference” to Musk’s favorite sci-fi novel, Look to Windward by Iain Banks, rather than OpenAI’s financial projections or performance.
OpenAI further contends that Musk’s actions are part of a years-long “relentless” campaign of “harassment” aimed at seizing control of the company and undermining its leadership. The filing warns that if Musk succeeds, he could damage OpenAI’s revenue, drawing parallels to his management of Twitter.
In a series of posts on X, OpenAI labeled Musk’s actions as “bad-faith tactics” to hinder its progress and accused him of prioritizing personal gain over the company’s mission. The posts referenced past blog entries on OpenAI’s nonprofit pivot and email exchanges with Musk, claiming he once sought to merge OpenAI with Tesla as a for-profit entity before exiting in 2018.
Musk, on the other hand, who left OpenAI’s board citing talent competition with Tesla and unspecified disagreements, has been a vocal critic of Altman’s leadership. He initially sued OpenAI in February 2024, then dropped the case in June, and refiled it in August.
OpenAI’s countersuit intensifies the legal battle, urging the court to protect its future structure and independence from Musk’s alleged interference. On the other hand, Musk via his legal team, has stated that it will drop the bid to acquire OpenAI if the board commits to keeping it as a nonprofit.
The filing further argues that Musk’s buyout offer is a genuine one, stating that the nonprofit should receive fair market value for its assets based on what an independent buyer would pay.