OpenAI says in memo that Musk’s claims ‘stem from Elon’s regrets’ that he’s not part of company
Sam Altman, CEO of OpenAI, at the Hope Global Forums annual meeting in Atlanta on Dec. 11, 2023.
Dustin Chambers | Bloomberg | Getty Images
OpenAI executives disputed claims Elon Musk laid out in a lawsuit on Thursday, and said the Tesla CEO is upset that he’s no longer part of the artificial intelligence startup.
“We believe the claims in this suit may stem from Elon’s regrets about not being involved with the company today,” wrote OpenAI Chief Strategy Officer Jason Kwon in an internal memo on Friday that was viewed by CNBC. “It is deeply disappointing to see Elon take this action against a company he helped start, especially given his close collaboration with some of you who are still here working towards the mission.”
Musk co-founded OpenAI in 2015 and stepped down from its board in 2018, four years after saying that AI is “potentially more dangerous than nukes.”
Musk is now suing Microsoft–backed OpenAI and CEO Sam Altman, among others, alleging they abandoned the company’s founding mission to develop artificial intelligence “for the benefit of humanity broadly.”
Since releasing the ChatGPT chatbot to the public in late 2022, OpenAI has become one of the hottest startups on the planet, with a valuation reportedly over $80 billion. The company’s convoluted “capped-profit” structure resulted in Altman being briefly ousted by the board late last year, before an uproar among investors and employees led to his quick reinstatement.
Musk has long wanted recognition for his central role in the creation of OpenAI, and he spent large chunks of the lawsuit telling his version of events. His lawyers said in the suit that Musk was approached in 2015 by Altman and OpenAI co-founder Greg Brockman and agreed to form a nonprofit lab that would develop artificial general intelligence, or AGI, outside of the corporate sphere.
Musk’s attorneys said their client contributed over $15 million to OpenAI in 2016, which was “more than any other donor” and helped the startup build a team of “top talent.” The next year, Musk gave nearly $20 million to OpenAI, which the attorneys reiterated was more than other backers. In total, Musk invested over $44 million into OpenAI from 2016 through September 2020, according to the suit.
Additionally, Musk leased OpenAI’s initial office space “and paid the monthly rental expenses,” the suit said. He was also “present for important company milestones.”
Kwon didn’t dispute Musk’s central role in the early days of OpenAI, but he added some other details. For example, Kwon wrote that Musk at one point indicated he needed “full initial control and majority equity” and later suggested that OpenAI merge with Tesla.
“We did not think either approach was right for the mission,” Kwon wrote.
In the memo, Altman called Musk a hero of his and said the he misses the old version of his co-founder. But he said the company’s mission continues.
While it’s the first time the dispute between the two sides has resulted in a fiery lawsuit, they’ve been at odds for a while.
Before he split with OpenAI, Tesla hired co-founder Andrej Karpathy as senior director of AI. Karpathy returned to OpenAI in 2023. And Musk has been notably vocal in his opposition to OpenAI and its Microsoft partnership in recent years, stating publicly in November that OpenAI had deviated from its original mission.
“OpenAI should be renamed ‘super closed source for maximum profit AI,’ because this is what it actually is,” Musk said onstage at The New York Times’ DealBook conference. Regarding OpenAI’s transformation from an “open source foundation” to a multibillion-dollar for-profit company, Musk said, “I don’t know, is this legal?”
Kwon insisted on Friday that OpenAI is independent and continues to work “to ensure AGI benefits all of humanity.”
Musk’s lawyers didn’t immediately respond to a request for comment.
— CNBC’s Lora Kolodny and Hayden Field contributed to this report
WATCH: Elon Musk lawsuit against OpenAI and Altman began a year ago
Technology
Blip, dip, pullback or the beginning of the end? Global investors weigh in on stock sell-off
Global investor sentiment for artificial intelligence remains buoyant, despite on the ongoing stock sell-off.
European and Asia markets have seen days of consecutive losses, tracking their U.S. counterparts lower as pressures mount on AI-related stocks and their valuations. The pan-European Stoxx 600 on Tuesday notched its lowest level in a month, with major bourses opening mixed on Wednesday, while Asia-Pacific markets fell.
Stateside, stock futures were little changed overnight after major U.S. indexes extended their losses. AI-related stocks such as Nvidia, Palantir, and Microsoft are among those feeling the pressure.
“We do think this is an AI specific pullback. We don’t think this is the beginning of the bear market,” Emma Wall, head of investment analysis at Hargreaves Lansdown, told CNBC’s “Squawk Box Europe.”
When considering whether this is the “beginning of the end” or a moment marking “the big pullback,” Wall argued that while we are overdue a “major global market correction,” the current downturn is yet to bring this shift.
Many markets outside of the U.S. — particularly in Europe and the U.K. — already reflect much of the negative news, she said, adding that she sees the pressure as sector specific.
It is, however, an opportunity to rebalance portfolios, as “even taking into consideration this week, most people have had a really good run, even in AI stocks,” Wall said.
Mike Wilson, chief U.S. equity strategist and chief investment officer at Morgan Stanley, echoed this sentiment. He said markets have been in a correction for the past six weeks but “it’s not the end of the AI cycle.”
All eyes are on Nvidia, considered the bellwether of AI, as it’s due to post third-quarter earnings after the closing bell on Wednesday.
“Whatever happens tonight is, if it is a blip, is a pullback, it’s probably a dip to be bought. But I think we are in the midst of somewhat of a correction right now,” Wilson told CNBC’s “Inside India,” adding that he thinks it’s the middle-inning.
“The credit part of this spending is just beginning, meaning we’re just starting to raise money in the credit markets. It’s not like that money is going to sit there and they’re not going to spend it, which means there’s probably time on the clock with these intermittent kind of pullbacks,” he added.
Companies and investors are engaged in a delicate dance.
On one side, AI labs and their partners are making big promises and aggressive plays, according to Jason Thomas, head of global research and investment strategy at Carlyle. “But it’s not incumbent upon investors to believe them,” he told CNBC’s Julianna Tatelbaum, from the firm’s annual conference.
“Investors, of course, have to ensure that they are getting compensated for the risk that things don’t work out quite as planned, and I think that there’s a sense that perhaps there’s been some assets in the space that have been priced to best case scenarios. So I think that that’s the reassessment that’s going on right now,” he said.
Hyperscalers’ rising capex
The sell-off comes as the pace of debt dealmaking picks up, fueling speculation that it may have unsettled investors, many of whom have remained bullish on AI as long as companies post sound earnings. Google-owner Alphabet and Meta have issued bonds, for example.
“It’s not a problem, as long as the funding markets are there, meaning they’re raising the debt,” Wilson added. “I mean, there’s investors lined up,” he said.
It does however, become a problem when this is no longer the case, but “we haven’t seen that yet,” he said.
AI has fundamentally changed the strategy for many Big Tech firms, particularly when it comes to U.S. hyperscalers, which have morphed into capex-heavy companies from once asset-light businesses. Global investors are now assessing this new dynamic. Bank of America‘s latest Global Fund Managers Survey found that, for the first time in two decades, fund managers are concerned about hyperscalers “overinvesting.“
“[Hyperscalers] traded at very high price-to-book ratios, which made a lot of sense. You don’t value a money-printing machine based on the cost of the paper or based on the cost of the printing press. And that’s essentially what they were, these massive money printing machines where most of their assets were intangible, proprietary technology, the digital platforms,” said Carlyle’s Thomas.
“Now they’ve actually started to invest so much that 70% of their cash flow is being consumed by capital spending and, if you look at their book value now, 70% actually consists of property, plant and equipment, largely data centers. That’s a four-fold increase from a decade ago,” he added.
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