Elon Musk’s trial against Sam Altman will unveil the current power struggle for OpenAI

The contentious legal battle between Elon Musk and the prominent artificial intelligence company, OpenAI, headed by Sam Altman, could hinge on a few pages from an executive’s personal diary. “This is the only chance we have to get out from Elon,” wrote Greg Brockman, OpenAI’s president and a co-founder, in the fall of 2017. “Is he the ‘glorious leader’ that I would choose?”

Brockman’s diary entry is among the thousands of pages of internal documents disclosed in court following Musk’s lawsuit against the company, its CEO Altman, and Brockman in 2024.

Musk is pursuing $150 billion in damages from OpenAI and Microsoft, one of its major investors, as reported by a source connected to the case, with the funds intended for OpenAI’s charitable division.

The trial’s jury selection is scheduled for Monday at the federal court in Oakland, California, with opening statements anticipated on Tuesday.

The documents provide a unique glimpse into the egos and personalities that have influenced OpenAI’s transformation from a nonprofit research lab in Brockman’s apartment to a tech giant valued at over $850 billion.
Their insights illuminate the perspectives of the most influential CEOs regarding generative AI technology.

The trial poses a risk to OpenAI’s potential initial public offering by raising questions about its leadership. An ongoing series of negative revelations may further amplify the increasing skepticism among Americans regarding AI technology in general.

The case revolves around Musk’s assertion that OpenAI, Altman, and Microsoft have deviated from OpenAI’s initial mission as a nonprofit aimed at benefiting humanity by establishing a for-profit entity in March 2019, just 13 months after Musk departed from the OpenAI board.

Musk stated that the defendants concealed their intentions from him, took advantage of his name and financial backing to establish a “wealth machine” for their own benefit, and are liable for damages due to having deceived him and the public.

He is also seeking for OpenAI to transition back to a nonprofit, for Altman and Brockman to be removed from their positions as officers, and for Altman to be taken off the board, along with other proposed actions.

OpenAI’s attorneys argue that Musk is driven by a desire to dominate OpenAI and support his own AI venture, xAI, which he established in 2023 soon after the debut of ChatGPT and the onset of the AI boom.

The company states that Musk participated in discussions regarding the establishment of OpenAI’s new structure and insisted on taking the role of CEO. Microsoft, also a defendant, refutes allegations of collusion with OpenAI, asserting that its partnership with OpenAI commenced only after Musk’s departure.

Prominent figures are anticipated to provide testimony.

Prominent figures in Silicon Valley, such as Musk, Altman, and Microsoft CEO Satya Nadella, are anticipated to provide in-person testimony. Shivon Zilis, a former board member of OpenAI and mother of four, is expected to be a significant witness, as OpenAI’s lawyers contend that she provided information regarding the organization to Musk.

The trial occurs during a particularly delicate period for both parties involved.

OpenAI is encountering unmatched competition from rivals such as Anthropic and is investing billions in computational resources. According to Reuters, it is also gearing up for a potential blockbuster IPO that could value the company at $1 trillion.

Musk’s companies encounter comparable challenges. His xAI, which has now been integrated into his rocket company, SpaceX, lags significantly behind OpenAI in terms of usage, as evidenced by the number of active users and the range of applications currently supported by OpenAI’s technology. SpaceX is set to go public this year, potentially marking the largest IPO in history.

Court documents reveal that Musk provided approximately $38 million in seed funding to OpenAI from 2016 to 2020, primarily before his departure from the board.

In 2019, OpenAI transitioned to a for-profit entity overseen by the nonprofit organization. That allowed it to accept funds from external investors while remaining accountable to the nonprofit’s original mission.

Last fall, OpenAI restructured itself once more to operate as a public benefit corporation, with the nonprofit and various investors, including Microsoft, holding stakes in the organization. The nonprofit possesses a 26% ownership interest along with extra warrants contingent upon OpenAI achieving specific valuation milestones.

Musk’s legal team assessed damages by taking OpenAI’s valuation and multiplying it by a fraction of the nonprofit’s stake that could be linked to Musk’s contributions. His team indicates that 50% to 75% of the nonprofit’s stake can be linked to Musk.

A ‘Manhattan Project for AI’

Musk and Altman established OpenAI with the aim of advancing AI for the benefit of humanity while countering competitors like Google.

In May 2015, Altman discussed the concept with Musk, referring to it as the “Manhattan Project for AI,” according to court documents.

Musk’s involvement assisted OpenAI in attracting leading researchers, including now-former chief scientist Ilya Sutskever.

By mid-2017, Musk started to doubt OpenAI’s viability, at one point withholding promised funds after a clash with Altman, Brockman, and Sutskever, as detailed in court filings. One source of tension was Musk’s desire to be CEO, as revealed in emails, which caused unease among the other co-founders.

During that period, Brockman expressed his frustration with Musk’s position and contemplated whether transforming OpenAI into a profit-driven enterprise might also lead to his own wealth.

“Financially, what will lead me to $1B?” he penned in his diary. “Agreeing to Elon’s terms undermines two aspects: our capacity for choice (although we might have the power to override him) and the financial implications.”

Musk’s attorneys emphasized the entry to illustrate that OpenAI’s executives were driven more by profit than by their mission.

By January 2018, it seemed that Musk had resigned himself to the situation.

“OpenAI is destined for failure compared to Google,” Musk emailed.

In late 2022, OpenAI introduced ChatGPT.