Elon Musk has escalated his legal battle with OpenAI and Microsoft, demanding between $79 billion and $134 billion in damages, claiming the AI company defrauded him by abandoning its nonprofit mission and reaping massive profits from his early contributions.
The Claims: Betrayal of Nonprofit Status
In a court filing submitted Friday, Musk argues that he is entitled to a share of what he calls OpenAI’s “wrongful gains.” According to the lawsuit, Musk co-founded OpenAI in 2015 and contributed approximately $38 million in seed funding, which represented roughly 60 percent of the nonprofit’s early capital. Beyond financial contributions, Musk claims he helped recruit key employees, provided introductions to industry contacts, and lent credibility to the fledgling organization.
The legal argument hinges on OpenAI’s shift away from its original nonprofit model. Musk left the company in 2018 over concerns about its commercialization and strategic direction, but did not pursue legal action until March 2024.
The Damages Calculation
Financial economist C. Paul Wazzan, serving as Musk’s expert witness, calculated the alleged wrongful gains. According to the filing, OpenAI earned between $65.5 billion and $109.4 billion in improper gains, while Microsoft—which holds a 27% stake in OpenAI—earned between $13.3 billion and $25.1 billion.
Musk’s lawyers argue that just as early startup investors can realize gains orders of magnitude greater than their initial investment, Musk deserves compensation based on OpenAI’s current $500 billion valuation.
OpenAI’s Defense
OpenAI has firmly denied the allegations, calling Musk’s lawsuit “baseless” and part of “his ongoing pattern of harassment.” The company published a response titled “The Truth Elon Left Out,” arguing that Musk sought “full control” of the organization and suggested his children oversee artificial general intelligence development during succession planning discussions.
OpenAI stated it feels “confident about our chances of winning the case,” noting that the company believes the case is worth no more than the $38 million Musk originally donated.
What’s Next
The jury trial is scheduled for late April in Oakland, California. A federal judge recently rejected a final bid by OpenAI and Microsoft to avoid the trial, setting the stage for a high-stakes legal showdown. Musk has signaled his eagerness for the proceedings, posting on X that “The discovery and testimony will blow your mind.”