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Elon Musk has filed a request in federal court to stop the conversion of OpenAI into a fully profitable company. Additionally, it seeks to prevent OpenAI from allegedly forcing its investors to refrain from funding competitors such as its startup xAI.
The legal dispute and accusations
The legal action, led by Musk’s attorneys Shivon Zilis and xAI, accuses OpenAI and Microsoft of violating antitrust and unfair practices laws. In his lawsuit, initially filed in March 2024 and later moved to federal court, Musk alleges that OpenAI used sensitive competitive information to benefit Microsoft through their collaboration and board positions.
Musk’s legal team argues that OpenAI and Microsoft have established a “group boycott” that limits xAI’s access to essential investment capital, hampering its ability to compete in the burgeoning generative artificial intelligence market.
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Response from OpenAI and Microsoft
OpenAI called Musk’s accusations “meritless.” Microsoft, which has invested nearly $14 billion in OpenAI, declined to comment on the allegations. However, in October, the company reported losses of $1.5 billion largely stemming from OpenAI.
The background of the dispute
OpenAI, launched in 2015 as a nonprofit, adopted a limited-profit model in 2019. It is now in the process of becoming a fully for-profit public benefit corporation, which could attract more investors but has also sparked controversy.
The conversion has raised concerns about how OpenAI maintains its nonprofit status while seeking to maximize profits, a strategy that Musk and his legal team have called contradictory and harmful to competition.
The rise of xAI and market competition
Since its debut in 2023, xAI, Musk’s new startup, has launched its Grok chatbot and is looking to raise $6 billion at a $50 billion valuation. Part of these funds will be used to purchase 100,000 Nvidia chips to boost its AI technology.
Despite legal challenges, the generative AI market continues to grow rapidly, with revenue projected to exceed $1 trillion in the next decade. Companies like Anthropic, Google and Amazon are also competing in this sector, intensifying the fight for innovation and capital.
The future of OpenAI and artificial intelligence
As the AI market continues to boom, the legal battle between Musk, OpenAI and Microsoft highlights the ethical, regulatory and competitive challenges faced by leading companies in the sector. The courts’ decision could have a significant impact on the future of the artificial intelligence industry and how relationships between investors, developers and technology companies are structured.
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