Sam Altman-led artificial intelligence research startup and ChatGPT maker OpenAI on Friday responded to Elon Musk's legal action against it, accusing him of trying to create a for-profit version of the company in 2017.
Musk, who co-founded OpenAI, has been highly critical of OpenAI's shift to a for-profit model of late and, in March, filed a lawsuit in a US Federal Court claiming the AI startup breached its founding mission as a nonprofit by adopting a for-profit structure.
A Friday blog post by OpenAI countered Musk's argument revealing that the he had proposed a for-profit structure for the startup but walked away when he didn't gain full control. OpenAI's blog post highlighted that Musk initially supported a for-profit model but later opposed the company's shift to a nonprofit. It alleged that Musk's recent legal actions against them are motivated by competition with his AI company, xAI, which was launched in 2023.
Musk's concerns with OpenAI's nonprofit model date back to 2015, and in 2018, he proposed merging OpenAI with Tesla. However, after disagreements, Musk resigned from OpenAI's board.OpenAI later transitioned to a "capped-profit" model in 2019 and is now working toward becoming a fully for-profit public benefit corporation.
Quoting the OpenAI blog post, US online news platform Money Report reported on Friday; 'OpenAI's "structure doesn't seem optimal," Musk wrote in a November 2015 email to OpenAI CEO Sam Altman, according to screenshots shared in the blog post. He added that receiving a "salary from the nonprofit muddies the alignment of incentives" and that it's "probably better to have a standard C corp with a parallel nonprofit."
In a text conversation with former board member Shivon Zilis, OpenAI co-founder Greg Brockman wrote that a conversation he had with Musk "turned into talking about structure" and that Musk "said non-profit was def the right one early on, may not be the right one now," Money Report wrote quoting the OpenAI blog.
Musk filed a lawsuit in 2023 accusing OpenAI and Microsoft of anti-competitive practices. His legal team argues that OpenAI's structure, including its ties with Microsoft, harms competitors like xAI. OpenAI's valuation has soared to $157 billion, largely due to the success of ChatGPT, and it faces increasing competition from Musk's xAI and other tech giants. The legal battle between Musk and OpenAI continues to escalate, with Musk seeking to prevent OpenAI from benefiting from what he claims is sensitive information shared through its partnership with Microsoft.