A Billion-Dollar Myth
The Musk v. OpenAI trial has exposed a fight over control, dressed in the language of charitable purpose.
The Musk v. OpenAI trial enters its third week today in Oakland, with Microsoft CEO Satya Nadella and former OpenAI co-founder Ilya Sutskever expected to testify and closing arguments anticipated by Thursday. Elon Musk is suing OpenAI, CEO Sam Altman, president Greg Brockman, and Microsoft, alleging that the company’s conversion from a nonprofit research lab to a for-profit corporation valued at more than $850 billion violated a charitable trust. He seeks the removal of Altman and Brockman, a reversal of OpenAI’s corporate restructuring, and the return of what his attorneys have called up to $134 billion in “wrongful gains” to the nonprofit foundation. OpenAI has called the lawsuit “baseless” and argued that Musk filed it to undermine a competitor to his own AI company, xAI.
Unsustainable idealism
Musk, Altman, Brockman, and others founded OpenAI in December 2015 as a nonprofit AI research lab. Musk testified two weeks ago that he conceived the idea and the name, recruited key researchers including Ilya Sutskever, and provided the initial funding. His stated motivation was alarm about Google’s unrivaled position in AI research. Musk told the jury that Google co-founder Larry Page had called him a “speciesist for being pro-human” during an argument about AI safety, and that he wanted a “counterweight” to a company that had “all the money, all the computers, and all the talent.”
The nonprofit structure carried a practical limitation from the start. Frontier AI research requires compute infrastructure at a scale that organizations which cannot issue equity or offer competitive stock compensation struggle to finance. Musk pledged $1 billion to OpenAI but contributed approximately $38 million before his departure. By 2017, the founders had begun discussing alternatives. Emails presented through Shivon Zilis’s testimony described conversations about for-profit conversion, a for-profit subsidiary, a merger with Tesla, and a cryptocurrency offering. Musk participated in these discussions.
Overreach from the outset
Musk’s preferred structure gave him the central role. Brockman testified last week that Musk wanted to become CEO of OpenAI, and that Musk had said that he “experienced what it was like to not have control and he didn’t like it,” citing problems at Zip2 and having to bail out his cousins at SolarCity. Brockman also testified that Musk connected the ambition to a plan to build a city on Mars, an effort that Musk estimated would cost $80 billion. Zilis confirmed that she had relayed ideas to Musk including making OpenAI a public benefit corporation subsidiary of Tesla and recruiting Altman as an “anchor” for Tesla’s AI efforts.
The other founders declined. Brockman testified that he never made any commitments to Musk about the company’s corporate structure and never heard anyone else make them. Musk left the board in February 2018. OpenAI created a capped-profit subsidiary the following year and accepted a $1 billion investment from Microsoft, the first of several rounds that expanded Microsoft’s stake to a point where, according to expert testimony presented at trial, Microsoft’s share of OpenAI’s value now exceeds the nonprofit’s. Musk founded xAI as a direct competitor in 2023 and filed suit in 2024, withdrew the case, then refiled. He acknowledged on the stand that xAI is “technically a competitor” and that it had used some of OpenAI’s technology to train its own models through distillation.
Ambitions exposed
Musk testified over three days starting April 28, describing himself as “a fool” for donating $38 million and repeatedly accusing Altman and Brockman of trying to “steal a charity.” He told the jury that he had “extreme concerns” about AI safety and had started OpenAI as a counterweight to Google. Under cross-examination, OpenAI’s attorneys pressed him on the gap between his $1 billion pledge and his actual contribution. Musk argued that his reputation and other intangible contributions brought his total above $100 million.
Brockman’s personal journals, read aloud in court last week, revealed the complementary set of ambitions. The entries included the question “Financially, what will take me to $1B?” and the line “It would be nice to be making the billions.” One passage contemplated cutting Musk out and converting OpenAI to a for-profit, with Brockman writing that Musk’s “story will correctly be that we weren’t honest with him in the end about still wanting to do for-profit just without him.” Brockman disclosed a roughly $30 billion stake in OpenAI’s for-profit subsidiary. He countered that Musk had wanted “absolute control,” had recruited researcher Andrej Karpathy from OpenAI without notice, and had arranged for OpenAI employees to do months of unpaid work on Tesla’s Autopilot system.