It was last May and Elon Musk was sitting down for an interview with CNBC's David Faber.
When asked about Altman and OpenAI, Musk was visibly frustrated.
“It seems strange that something can be an open-source, non-profit solution and somehow turn into a closed-source, for-profit solution,” he added. “This is the exact opposite of what I gave them the money for. Is that legal? It doesn’t seem legal.”
Musk's response may have sent the message that the billionaire was ready to take Altman and OpenAI to court.
On Thursday, Musk sued OpenAI and its CEO, claiming the company's partnership with Microsoft violates its mission by putting profit over developing open-source technology to benefit humanity.
The two had previously argued, and Altman had been more diplomatic in his public answers when asked about Musk, even calling the Tesla CEO his hero.
But now Musk has thrown down the gauntlet, likely marking a point of no return for their relationship as his lawsuit seeks to force OpenAI to open source its research and technology, Microsoft from GPT- 4 and prevent Altman and Microsoft from profiting from the company.
“It seems like he's trying to slow them down so he can catch up with his own efforts,” Kyle Lawrence, a corporate and securities attorney at Falcon Rappaport & Berkman, told Business Insider. “This is the approach of many big tech giants. They succeed by stifling the ability of other institutions to evolve.”
After all, Musk is anything but a disinterested party.
Musk's lawsuit comes after the billionaire founded his own AI company last year. Musk said he invested tens of millions of dollars when he founded OpenAI, but resigned from the company's board in 2018.
At the time, Musk said he left to avoid a potential conflict of interest with Tesla and its AI efforts.
A weak case
Despite Musk's stellar performance, his case against OpenAI appears shaky at best, said David Hoffman, a contract law expert at the University of Pennsylvania.
“Without a written contract, it would be very difficult to claim a breach of contract,” Hoffman said.
In Musk's case, it is argued that OpenAI deviated from its “founding agreement,” but there appears to be no such written agreement. The lawsuit is based on unwritten contractual claims that would be difficult to sustain in court, Hoffman said.
Instead, Musk's case cites an email from Altman (which appears to be a loose negotiation rather than a contract) and OpenAI's articles of incorporation (which Musk did not sign and which makes no mention of the company remaining open source).
And because OpenAI is a nonprofit organization, it will be difficult for the billionaire to claim that OpenAI's board has fiduciary duties to him, Samuel Brunson, a nonprofit law expert at Loyola University, told Business Insider.
The billionaire's argument regarding OpenAI's failure to act for the “good of humanity” is more of a philosophical argument than a solid legal argument, said Kyle Lawrence, a corporate and securities attorney at Falcon Rappaport & Berkman.
“Who says what they do doesn’t benefit humanity?” Lawrence said. “They could easily say that they need a billion dollars to do this, and who is to say that the mechanism they have put in place to get that billion dollars is at odds with their goal of helping humanity?”
OpenAI could pay a high price
While experts say it's unlikely Musk's case will be successful, OpenAI could still pay a price.
“Such lawsuits can unearth a lot of dirty laundry and be a major distraction that could impact their daily operations,” Hoffman said.
The publicity surrounding the lawsuit — whether Musk wins or loses — could also damage OpenAI's reputation and fuel the fire when Altman was briefly ousted. According to Lawrence, Musk, as one of the richest men in the world, could embroil OpenAI in litigation for years.
The case could also set a dangerous benchmark – if Musk were to win.
“If Musk were to win this case, it would set a bad precedent for nonprofits around the world,” Brunson said. “There could be a number of unhappy donors coming forward trying to get their money back, and most nonprofits don’t have the same resources as OpenAI.”
