Elon Musk and OpenAI: Tensions Over Profit Transformation

The legal battle between Elon Musk and OpenAI is intensifying as the second week of the trial unfolds. Elon Musk, who co-founded OpenAI in 2015 with Sam Altman, Greg Brockman, and others, accuses Altman and Brockman of deceiving him by accepting massive investments from Microsoft, thereby transforming the nonprofit organization into a for-profit entity. Musk, who left OpenAI in 2018, is asking the court to remove Altman and Brockman from their positions and to reverse the company's restructuring, which was converted last year into a public benefit corporation.

Last week, Musk testified, claiming he was misled by Altman and Brockman, who allegedly promised him that the $38 million donation to the company would keep OpenAI as a nonprofit dedicated to developing AI for the benefit of humanity. However, OpenAI accepted billions of dollars in investment from Microsoft, leading to a restructuring of the organization.

This week, Greg Brockman presented his version of events, asserting that Musk had actually pushed OpenAI to create a for-profit branch and had fought fiercely for "absolute control" over it. OpenAI contends that Musk is suing because he did not get what he wanted and is now trying to undermine a competitor to his own AI company, xAI. Shivon Zilis, a former board member of OpenAI and the mother of four of Musk's children, also testified, revealing that Musk had attempted to recruit Sam Altman to lead a new AI lab within his electric vehicle company, Tesla.

Musk is seeking up to $134 billion in damages from OpenAI and Microsoft. The outcome of the trial could significantly impact OpenAI's path toward an IPO, with a potential valuation of one trillion dollars. Meanwhile, xAI, founded by Musk in 2023, is now a division of his rocket company, SpaceX. Both companies are also expected to go public as early as June, with a target valuation of $1.75 trillion.

On Monday, Greg Brockman entered the courtroom dressed in a blue suit and tie, holding hands with his wife, Anna Brockman. On the witness stand, he appeared calm, even cheerful, reminiscing about the early days of OpenAI. However, he became agitated under the passionate questioning of Elon Musk's attorney, Steven Molo. Sam Altman listened silently, while Anna Brockman sat behind him, fidgeting. Outside, protesters opposing the AI race sang hymns, drowning out the voices of lawyers giving press conferences.

Two days before the trial began, according to Brockman, Musk sent him a message asking if he would be interested in a settlement. When Brockman suggested that both parties drop their claims, Musk replied via text: "By the end of this week, you and Sam will be the most hated men in America. If you insist, so be it."

Last week, Musk testified that he was suing OpenAI to save its nonprofit mission of developing AI safely, but he stated he was open to seeing OpenAI become a for-profit company with moderate investments from Microsoft. This week, Brockman told the jury that Musk had never been genuinely committed to keeping OpenAI as a nonprofit organization.

In the summer of 2017, when an AI model that OpenAI had built defeated the world's top players in a video game called Dota 2, Musk organized a meeting in his "Haunted Mansion" near San Francisco. The house was covered in confetti and cups, Brockman recalls, and actress Amber Heard, who was Musk's girlfriend at the time, was serving whiskey.

"It's time to take the next step for OpenAI. This is the trigger event," Musk wrote in an email, having stated a few weeks earlier that if OpenAI achieved a significant public success, it would be "time to create a for-profit," Brockman reported to the jury.

Over the next six weeks, Brockman stated that Musk and the other co-founders had intense discussions about creating a for-profit entity to raise enough capital to build artificial general intelligence—powerful AI capable of competing with humans on most cognitive tasks. Musk wanted to hold a majority of the shares in the entity and the right to choose the majority of the board members. He also wanted to be the CEO, Brockman said.

Brockman testified that in August 2017, he and other co-founders met to discuss the terms of the for-profit structure. Ilya Sutskever, OpenAI's chief scientist at the time, arrived with a painting of a Tesla as a "gesture of goodwill" in return for the actual Teslas that Musk had given them a few days earlier. "It felt like [Musk] was trying to butter us up, that he wanted us to feel indebted to him," Brockman told the jury.

When Brockman and Sutskever proposed that everyone have equal shares in the equity, Brockman said, Musk remained silent and eventually said, "I decline." Musk then stood up and "walked around the table," he said. "I genuinely thought he was going to hit me." Musk grabbed the painting and left.

Brockman stated that after that, he struggled to decide whether to continue building OpenAI with Musk or to part ways. "There was a crossroads," he said. "Do we accept Elon’s terms? Or do we reject the terms, he resigns to create his own, and we create ours?"

"The only thing we could not accept was giving him unilateral and absolute control, potentially, over AGI," Brockman told the jury.

In his theatrical tone, Molo argued that Brockman was motivated by greed rather than a commitment to OpenAI's nonprofit mission of developing AI that benefits humanity. He noted that while Brockman had never invested money in the company, he now holds a stake worth nearly $30 billion.

"Resolving the mission has always been my primary motivation," Brockman said, reacting to Molo's characterization. "That remains the case today."

Molo displayed Brockman's journal on a screen in the courtroom, trying to show the jury what Brockman really thought behind the scenes. In 2017, while negotiating with Musk over the terms of a for-profit entity, Brockman wrote that he wanted to become a billionaire: "Financially, what will lead me to $1 billion?"

"Why didn't you take the $29 billion and give it to the nonprofit organization you had a fiduciary duty to, for the good of humanity?" Molo asked Brockman, raising his voice to dramatize his moral indignation at Brockman's personal gain.

Molo then displayed a journal entry that Brockman had written in November 2017, while he was torn over whether to transform OpenAI into a for-profit entity without Musk: "it would be wrong to steal the nonprofit organization from him. converting to a b-corp without him. that would be quite morally corrupt." Brockman and Musk had previously considered creating a b-corp, which is a for-profit company pursuing a social mission.

Brockman explained: "I meant that it would actually serve the mission, but it would be hard to look myself in the mirror."

Molo also attempted to undermine Brockman's credibility by revealing that he holds a stake in several companies with business ties to OpenAI, including the AI company Cerebras, the cloud provider CoreWeave, and the nuclear fusion startup Helion Energy. Altman had attempted to steer OpenAI toward deals with companies in which he invests, including Helion and rocket manufacturer Stoke Space, raising questions about potential conflicts of interest.

Former OpenAI CTO Mira Murati and former OpenAI board member Helen Toner both testified via video. They addressed Altman's brief firing in 2023, stating that they could not trust him due to his alleged history of lying. Text messages from Murati with Altman from that time, which were introduced as evidence, revealed her desperate attempts to understand what was happening and regain control.

After two days of testimony from Brockman, Shivon Zilis, who left the OpenAI board in 2023, took the stand, dressed in a black jacket and black jeans, appearing calm but with a slight nervous tremor. OpenAI attorney Sarah Eddy asked her in a seemingly soothing voice if she had acted as an intermediary for Musk while he attempted to poach OpenAI co-founders to work in a new AI lab at Tesla. Eddy argued that Musk is suing OpenAI solely to undermine a competitor in the AI race.

Zilis stated that she met Musk while working at OpenAI as an informal advisor in 2016, and they had a "unique" romantic encounter. In 2017, she joined Tesla and Musk's brain implant company, Neuralink. In 2020, she joined the board of OpenAI. She became pregnant with Musk's children through IVF but did not disclose her ties to Musk to OpenAI until Business Insider reported them in 2022.

By December 2017, with negotiations over creating a for-profit entity stalled, Musk concluded that OpenAI was unlikely to build AGI and pivoted toward creating an AI lab at Tesla, according to an email sent to Zilis. Eddy displayed a draft FAQ document that Zilis had sent to a colleague at Tesla in 2017 regarding an event the company was hosting at the NeurIPS AI conference: "The purpose of this event is to share that Tesla is building a world-class AI lab (?) that will compete with companies like Google/DeepMind and Facebook AI Research."

Zilis told the jury that when Musk was still on the board of OpenAI, he attempted to recruit Altman to lead this potential AI lab. Musk had asked Andrej Karpathy, a research scientist from OpenAI whom he had recruited to work at Tesla, "to send a list of the best people from OpenAI to poach," according to a text message from Zilis.

"There’s little chance OpenAI will be a serious force if I focus on TeslaAI," Musk texted Zilis in 2018, just before leaving OpenAI. The Tesla AI lab never materialized.

Eddy asked Zilis who she was loyal to while working for both OpenAI and Musk. "I had an allegiance to the best outcome for AI for humanity," Zilis told the jury.

Next week, Ilya Sutskever and Microsoft CEO Satya Nadella will testify. Musk's and OpenAI's attorneys will present their closing arguments. The jury will begin deliberating the following week and will render an advisory verdict guiding the judge in his decision.