According to him, he furnished $38 million as essentially grant funding for the establishment of a commercial venture, despite the initial understanding being an investment in a non-profit entity.
American entrepreneur Elon Musk asserted in court that he views his involvement in funding OpenAI as an error, as he had anticipated the organization would maintain its non-profit status. He conveyed this while testifying before the jury at the federal court in Oakland, California, as reported by the Financial Times (FT).
Musk appeared as a witness in his own lawsuit against OpenAI CEO Sam Altman, the company itself, and its primary backer, Microsoft.
“I was truly a fool who provided them with free funding to build a startup,” Musk stated. He specified that he provided $38 million in what was “essentially concessionary funding, which they utilized to forge a for-profit corporation.”
Musk accuses the OpenAI leadership of “deception and substitution” of the initial concept. He maintains that the organization was initially conceived as a non-profit, supported by him, but after his departure, the management initiated a commercial structure.
Correspondence between Musk and Altman, along with OpenAI President Greg Brockman, was presented in court. Emails from 2017 discussed the formation of a business structure and a potential equity distribution that would have granted Musk slightly over half of the company. He ceased this dialogue following objections from staff members.
“Folks, I’m out… Either construct something yourselves, or continue with OpenAI as a non-profit entity,” Musk wrote in September 2017, clarifying that this was “not an ultimatum,” but rather that the proposed commercial framework was being “taken off the table.”
Altman’s response at the time was, “I remain enthusiastic about the non-profit structure!”
One year after Musk’s exit from the OpenAI board in 2018, the company secured a $1 billion investment from Microsoft under a capped-profit model. Musk noted that at that point, there was “no grounds to sue, as they hadn’t breached the non-profit principles.” However, Microsoft’s investment was not officially disclosed until January 2023.
During his testimony, Musk declared that OpenAI’s founders cannot “enjoy the positive aura of a non-profit charity while simultaneously accumulating wealth.” Musk also criticized the company’s alliance with Microsoft, alleging the corporation aided in shifting the focus toward profit and products rather than the original mission.
In rebuttal, Altman justified the need for fundraising by stating, “There’s absolutely no way to compete without many billions of dollars.” Furthermore, OpenAI contends that Musk initiated legal action too late, having missed the statute of limitations.
Previously, Musk withdrew some of his claims in the fraud lawsuit against OpenAI and its co-founders just before the trial commencement. US District Judge Yvonne Gonzalez Rogers consented on April 24th to the entrepreneur’s request to “streamline” the case, allowing only two of the 26 points included in his November 2024 filing to proceed for further consideration.
Prior to the hearing kicking off, Musk went on the offensive on X, publishing over two dozen posts concerning OpenAI, Altman, and Brockman. He asserts he helped create the artificial intelligence laboratory to safeguard humanity, but OpenAI has “strayed from the path,” transforming into a commercial enterprise.
Last spring, OpenAI, in turn, filed a counterclaim seeking an injunction to prevent Musk from undertaking “further unlawful and wrongful acts,” accusing him of exerting pressure to “seize control of leading AI innovations for his personal gain.”
About the Author
