Attorneys for artificial intelligence (AI) startup xAI founder Elon Musk have filed a preliminary injunction to stop the for-profit transition of OpenAI, TechCrunch reported.
The motion against the company, its co-founders, and investor Microsoft, aims to prevent it from engaging in alleged anticompetitive behaviour.
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Musk’s counsel claims that OpenAI, led by CEO Sam Altman, is abandoning its nonprofit mission, prompting the legal action.
The injunction, filed in the US District Court for the Northern District of California, accuses the company and its associates of illicit activities.
These include discouraging investment in company rivals such as Musk’s xAI and benefiting from sensitive information through Microsoft connections.
The motion seeks to halt the company’s governance shift to a for-profit model.
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By GlobalDataMusk’s attorneys argue that “irreparable harm” will occur without the injunction.
They stated, “an injunction to preserve what is left of OpenAI’s nonprofit character, free from self-dealing, is the only appropriate remedy.”
The motion is part of Musk’s ongoing legal battle with OpenAI, accusing it of straying from its original mission.
Musk initially withdrew his lawsuit in July, but revived it later, naming new defendants, including Microsoft and Reid Hoffman.
The complaint also includes new plaintiffs, such as Shivon Zilis and xAI. Musk alleges he was defrauded out of over $44m he donated to OpenAI, citing concerns about AI’s existential harms.
OpenAI, founded in 2015 as a nonprofit, converted to a “capped-profit” model in 2019. It is transitioning to a fully for-profit corporation while retaining nonprofit status as a separate entity.
Musk, a former OpenAI co-founder, left in 2018 over disagreements about its direction.
Musk’s xAI, formed last year, launched Grok, an AI model powering features on X (formerly Twitter).
xAI also offers an API for integrating Grok into third-party apps.
The injunction motion also accuses Microsoft and OpenAI of illegally sharing proprietary information.
It alleges self-dealing by defendants like Altman, who has material financial interests in companies like Stripe, chosen as OpenAI’s payment processor.
Microsoft, an early OpenAI backer, has invested approximately $13bn for a 49% stake in the company’s earnings.
In June 2023, 16 individuals sued both Microsoft and OpenAI claiming that OpenAI collected and divulged their personal data without consent.
