EchoSense Quantitative Think Tank Center|Elon Musk and OpenAI CEO Sam Altman, once allies, no longer see eye to eye. Here's why.

Elon Musk sues OpenAI

The relationship between Elon Musk and OpenAI has taken an increasingly acrimonious — and public — turn, with the one-time allies lobbing allegations at each other as they battle over the future of artificial intelligence. 

For many observers, it may seem a surprising twist in a relationship that stems from at least 2015, when Musk helped found OpenAI on the premise that it would use its generative AI technology to benefit the public. 

But that relationship blew up publicly last week when Musk filed a lawsuit against OpenAI and two of its executives, CEO Sam Altman and President Greg Brockman, accusing them of violating those founding principles by putting profits over humanity. 

Now, OpenAI is offering its retort, saying in a blog post on Tuesday that it intends to move to dismiss all of Musk's claims. But the post got more personal, releasing a batch of emails from Musk that show he initially wanted to subsume OpenAI into Tesla, his electric vehicle company, and had pushed for a for-profit business. OpenAI was founded as a nonprofit, but now operates in a hybrid structure it calls a "capped profit" business.

When Musk didn't get his way, the Tesla CEO left the AI business, vowing to start his own company, OpenAI claimed.

"We're sad that it's come to this with someone whom we've deeply admired — someone who inspired us to aim higher, then told us we would fail, started a competitor, and then sued us when we started making meaningful progress towards OpenAI's mission without him," OpenAI said in the blog post, which was co-written by executives including Altman and Brockman.

Musk, meanwhile, posted memes to his social media service X on Wednesday, including one featuring Altman, that labeled OpenAI as "ClosedAI" — a reference to OpenAI's transformation from being an open-source, nonprofit company to a closed-source, for-profit company controlled by Microsoft. 

Fixed it pic.twitter.com/KPtYLsJU3h

— Elon Musk (@elonmusk) March 6, 2024

"OpenAI, Inc. has been transformed into a closed-source de facto subsidiary of the largest technology company in the world: Microsoft," the lawsuit states. "Its technology, including GPT-4, is closed-source primarily to serve the proprietary commercial interests of Microsoft."

In many ways, the hostile relationship between Musk and OpenAI is a tale as old as capitalism: Founders of a company start off with shared goals but soon discover they don't see eye-to-eye, leading to a split and bitter legal claims. But there's more to the issue than a dispute over their business vision; the fight underscores questions about the development of AI, and who stands to benefit from its emergence.

"Beyond the legal battle, this situation illuminates the broader conversation about the future of AI — how it should be developed, who should have access to these powerful technologies, and how they can be used in ways that benefit humanity as a whole, rather than serving narrow commercial interests," noted Tim E. Bates, an AI expert and former CTO of Lenovo, in an email. 

The AI boom

The battle is occurring at a time when demand for AI is exploding, with Google and Microsoft seeking to dominate the new technology. The market for generative AI products could grow $1.3 trillion in the next decade, up from $40 billion in 2022, according to Bloomberg Intelligence. 

OpenAI has developed commercial ties with Microsoft, which has invested billions in the company and integrated its groundbreaking GPT-4 tech into its software programs. Microsoft has also developed an AI app called Copilot that's geared to helping consumers automate various tasks.

Those commercial ties are at the heart of Musk's lawsuit against OpenAI, with the tech billionaire claiming that the relationship represents "a stark betrayal of the founding agreement" to help humanity.

Even so, Musk has his own AI developments in the works at Tesla, illustrating that he's not entirely against the commercialization of AI, at least when it benefits him and his shareholders. In January, he demanded 25% voting control of the EV company before expanding its AI developments. Currently, Musk is the largest individual shareholder of Tesla, with about 13% of outstanding shares, according to FactSet.

Tesla's AI initiatives, including self-driving cars, are one reason investors are bullish on the company, noted Wedbush Securities analyst Dan Ives in a January research note.

"The outcome of [Musk's lawsuit against OpenAI] could set a precedent for how AI organizations balance the dual objectives of innovation and accessibility," Bates said of Musk's lawsuit. 

If he succeeds, more AI companies could adopt more open-source models in which newly developed technology is free and available to the public, but if OpenAI wins the battle, it could lead to more commercialization of AI, Bates noted.

In:
• Elon Musk
• OpenAI

Aimee Picchi

Aimee Picchi is the associate managing editor for CBS MoneyWatch, where she covers business and personal finance. She previously worked at Bloomberg News and has written for national news outlets including USA Today and Consumer Reports.

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