Musk’s OpenAI lawsuit is ‘good advertisement for the benefit of Elon Musk’ but may have little legal merit
Elon Musk, owner of Tesla and the X (formerly Twitter) platform, attends a symposium on fighting antisemitism titled ‘Never Again : Lip Service or Deep Conversation’ in Krakow, Poland on January 22nd, 2024.
Beata Zawrzel | Nurphoto | Getty Images
When it comes to legal disputes, Elon Musk’s definition of victory may not always be winning in court.
Last week, Musk sued OpenAI and co-founders Sam Altman and Greg Brockman for breach of contract and fiduciary duty. Experts say the case is built on a questionable legal foundation, because the contract at the heart of the suit isn’t a formal written agreement that was signed by all parties involved.
Rather, Musk is alleging that the early OpenAI team had set out to develop artificial general intelligence, or AGI, “for the benefit of humanity,” but that the project has been transformed into a for-profit entity that’s largely controlled by principal shareholder Microsoft.
Musk used much of the 35-page complaint (plus attached exhibits) on Friday to tell his side of the story and to remind the world of his central position in the creation of a company that’s since become one of the hottest startups on the planet, (OpenAI ranked first on CNBC’s Disruptor 50 list in 2023) thanks largely to the viral spread of ChatGPT.
“It’s certainly a good advertisement for the benefit of Elon Musk,” Kevin O’Brien, partner at Ford O’Brien Landy LLP and former assistant U.S. attorney, told CNBC. “I’m not sure about the legal part though.”
O’Brien, who isn’t involved in any cases with Musk, added, “One thing that jumped right out at me is there’s no contract.”
In the suit, Musk’s lawyers say they want OpenAI to return to its work as a research lab and no longer exist for the “financial benefit” of Microsoft. Musk, who’s worth over $200 billion, is unconcerned about the legal costs of floating a suit that has no clear personal economic benefit and is of questionable merit.
Shannon Capone Kirk, global head of e-discovery and AI for Ropes & Gray LLP, told CNBC that Musk might just be seeking to force more information into the public realm about how OpenAI has been operating and how its business objectives have morphed in recent years.
Sam Altman, CEO of OpenAI, during an interview at Bloomberg House on the opening day of the World Economic Forum in Davos, Switzerland, on Jan. 16, 2024.
Chris Ratliffe | Bloomberg | Getty Images
It’s a “high-profile case with great public interest, a consequence of which might lead to OpenAI being available to everyone,” said Kirk, who isn’t working on any cases involving Musk. “Is that the real objective?”
In their complaint, Musk’s attorneys allege that OpenAI “has been transformed into a closed-source de facto subsidiary of the largest technology company in the world: Microsoft.” They also say the arrangement goes against a founding agreement and 2015 certification of incorporation that OpenAI established with Musk, who was a pivotal donor to OpenAI in its early years.
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.
The lawsuit fits a pattern for Musk, who has frequently posted on X and commented in public forums about his importance to the creation of OpenAI.
In November, Musk told an audience at the The New York Times’ DealBook conference 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 event. He noted that it’s transformed from an “open source foundation” to multibillion-dollar “for-profit corporation with closed source.”
Is there injury?
In the suit, Musk’s attorneys allege that the inner workings of OpenAI’s GPT-4 AI model are “a complete secret except to OpenAI—and, on information and belief, Microsoft,” and that the secrecy is driven by commercial gain rather than safety. Musk has publicly beefed with Microsoft for a while, and in May 2023, Musk attorneys accused the company of using X (formerly Twitter) data in unauthorized ways.
Even if OpenAI’s mission has changed, that doesn’t mean Musk has a solid legal case.
“If he has any hopes to recover, he’s going to have to prove that there was this agreement – that the company be open and not for profit and all these other things, and that the failure to do so has caused him injury, which is a separate problem,” O’Brien said. “It’s hard to see where the injury is here.”
Musk’s attorneys didn’t respond to a request for comment.
Musk has an AI company of his own, X.AI, which introduced a competing chatbot called Grok in November after two months of training. In December, X.AI filed with the SEC to raise up to $1 billion in an equity offering. And Musk is also developing autonomous vehicle tech and humanoid robotics, which require AI advances, at Tesla.
He’s been known to hire bigwigs from OpenAI, poaching Andrej Karpathy, a former OpenAI software engineer, over to Tesla in 2017. More recently, Musk hired Kyle Kosic from OpenAI to join X.AI.
One of Musk’s goals with this case, lawyers said, may be to shed light on details of OpenAI’s GPT-4 in the discovery process, should it get that far. O’Brien said it can be tough to keep intellectual property and other internal details private when a lawsuit is brought.
Kirk agreed, saying that in the discovery stage, there may be “lots of document requests for all kinds of communication,” such as internal conversations, text messages and more. Some of the documents produced may come with protective orders that keep them out of the public.
A portion of Musk’s lawsuit rests on the idea that OpenAI has already reached AGI, typically defined as AI that can operate on the same level — or higher — than humans when completing a wide array of cognitive tasks. The suit claims that since GPT-4 is “better at reasoning than average humans” based on test scores on the Uniform Bar Exam, GRE Verbal Assessment and even the Advanced Sommelier exam.
As part of its contract with OpenAI, Microsoft only has rights to OpenAI’s “pre-AGI” technology, and it’s up to OpenAI’s board to determine whether the company has reached that milestone.
In a memo to employees on Friday following the lawsuit, OpenAI said that “GPT-4 is not an AGI.”
“Importantly, an AGI will be a highly autonomous system capable enough to devise novel solutions to longstanding challenges,” Chief Strategy Officer Jason Kwon wrote. “GPT-4 can’t do that.”
Much of the AI community is in agreement with Kwon.
Kirk said “part of what they’re going to be litigating” is the question of what is AGI.
Read the full complaint here:
Nikesh Arora, CEO of Palo Alto Networks, looks on during the closing bell at the Nasdaq Market in New York City on March 25, 2025.
Jeenah Moon | Reuters
Palo Alto Networks reported better-than-expected quarterly results and issued upbeat guidance for the current period. The cybersecurity software vendor said Nir Zuk, who founded the company in 2005, is retiring from his role as chief technology officer.
The stock rose about 6% in extended trading.
Here’s how the company did compared to LSEG estimates:
- Earnings: 95 cents adjusted vs. 88 cents expected
- Revenue: $2.54 billion vs. $2.5 billion expected.
Revenue in the fiscal fourth quarter rose 16% from about $2.2 billion last year, the company said in a statement. Net income fell to about $254 million, or 36 cents per share, from about $358 million, or 51 cents per share, in the year-ago period.
The company also issued upbeat guidance for the fiscal first quarter. Earnings per share will be between 88 cents and 90 cents, Palo Alto said, topping an 85-cents estimate from StreetAccount.
For the full year, Palo Alto said revenue will range from $10.48 billion to $10.53 billion on adjusted earnings of $3.75 to $3.85 per share. Both estimates exceeded Wall Street’s projections.
Palo Alto said that for the fiscal first quarter, remaining purchase obligations, which tracks backlog, will range between $15.4 billion and $15.5 billion, surpassing a $15.07 billion estimate.
Last month, the company announced plans to buy Israeli identity security provider CyberArk for $25 billion. It’s the largest deal Palo Alto has made since its founding, and most ambitious in an acquiring spree that ramped up after CEO Nikesh Arora took the helm of the company in 2018.
Shares sold off sharply after the news broke and have yet to recover previous highs. The stock is down about 3% this year as of Monday’s close.
“We look for great products, a team that can execute in the product, and we let them run it,” Arora told CNBC following the announcement. “This is going to be a different challenge, but we’ve done well 24 times, so I’m pretty confident that our team can handle this.”
Lee Klarich, the company’s product chief, will replace Zuk as CTO and fill his position on the board.
WATCH: Power check on Palo Alto, Viking Holdings and Estee Lauder
The first “World Humanoid Robot Games” is in the books.
The three-day competition hosted in Beijing wrapped on Sunday, attracting 280 teams from 16 countries, including the U.S. Teams used robots manufactured by Chinese companies such as Unitree and Booster.
During the games, humanoid athletes competed in dance battles, martial arts, track and field events such as the 400-meter and 1500-meter races and long jump, and a soccer tournament.
“Robots have stronger joints and core strength,” said Guo Tong, who programmed one of the futuristic footballers for his team, Hephaestus.
Guo said he sees robots replacing his idol, soccer star Cristiano Ronaldo, by 2050.
“Robots are easier to coach,” Chinese Olympic boxer Li Yang told CNBC while watching his robot slug it out with another. “Humans are emotional.”
Hangzhou-based Unitree, seen as a competitor to Tesla‘s Optimus, won multiple medals. Beijing-based X-Humanoid and Hong Kong-listed Shenzhen firm UBTECH also impressed.
Humanoid robots from Unitree Robotics win the first place in the 4x100m Relay of Track and Field event on day three of the World Humanoid Robot Games at National Speed Skating Oval on August 17, 2025 in Beijing, China.
Zhang Xiangyi | China News Service | Getty Images
The Chinese government has targeted humanoid robots as a key future industry for the economy and Beijing has plans to build a world-class industry of humanoid robots by 2027.
The games are the latest in a series of events and programs aimed at promoting humanoid robot technology. China announced plans to hold its second Olympics-style event for humanoid robots next August.
Robots also put job skills to the test, showcasing their abilities as drug store clerks, factory workers, and hotel staff.
One challenge for a robot in housekeeping was to pick up all the garbage in a mock hotel room and take out the trash. Referees told CNBC the biggest obstacle for those robots was opening and closing the door.
Robot designer Wang Xidong says the competition is key to testing the robots’ skills and improving them.
“We are refining our robots,” Wang said. “Everyone feels motivated to compete.”
-
Sports3 years ago‘Storybook stuff’: Inside the night Bryce Harper sent the Phillies to the World Series
-
Sports1 year agoStory injured on diving stop, exits Red Sox game
-
Sports2 years agoGame 1 of WS least-watched in recorded history
-
Sports2 years agoMLB Rank 2023: Ranking baseball’s top 100 players
-
Sports4 years ago
Team Europe easily wins 4th straight Laver Cup
-
Sports2 years agoButton battles heat exhaustion in NASCAR debut
-
Environment2 years agoJapan and South Korea have a lot at stake in a free and open South China Sea
-
Environment2 years agoGame-changing Lectric XPedition launched as affordable electric cargo bike