Elon Musk Seeks Massive Damages from OpenAI and Microsoft in High-Stakes Legal Battle
Elon Musk has launched a bold legal offensive against OpenAI Inc. and Microsoft. He demands compensation ranging from $79 billion to a staggering $134 billion. Musk alleges that the generative AI company defrauded him by abandoning its nonprofit mission and forming a partnership with the software giant.
Court Filing Details the Financial Claim
Musk's lawyer, Steven Molo, detailed this damages request in a court filing on Friday. This move came just one day after a federal judge rejected a final attempt by OpenAI and Microsoft to avoid a jury trial. The trial is scheduled for late April in Oakland, California.
The filing cites calculations from financial economist expert witness C. Paul Wazzan. It argues that Musk deserves a significant portion of OpenAI's current $500 billion valuation. This claim stems from the alleged fraud involving the $38 million in seed money Musk donated when he helped found the startup in 2015.
"Just as an early investor in a startup company may realize gains many orders of magnitude greater than the investor's initial investment, the wrongful gains that OpenAI and Microsoft have earned – and which Mr. Musk is now entitled to disgorge – are much larger than Mr. Musk's initial contributions," wrote lawyer Steven Molo.
Background of the Dispute
Musk left OpenAI's board in 2018. He later launched his own artificial intelligence company in 2023. The legal battle began in 2024 against Sam Altman, OpenAI's co-founder and CEO. Musk challenges Altman's plans to operate OpenAI as a for-profit business. Both OpenAI and Microsoft have firmly denied all allegations.
OpenAI issued a strong statement in response. "Mr Musk's lawsuit continues to be baseless and a part of his ongoing pattern of harassment, and we look forward to demonstrating this at trial," the company said. "This latest unserious demand is aimed solely at furthering this harassment campaign."
Sam Altman has criticized Musk's lawsuit. He views it as a weaponization of the legal system designed to slow down a competitor. OpenAI has also warned investors to expect Musk to make attention-grabbing claims as the trial approaches.
Calculating the Damages
According to the court filing, expert witness C. Paul Wazzan calculated the damages by combining Musk's financial contributions with his non-monetary inputs. These included technical advice and business guidance provided to OpenAI.
Wazzan's analysis estimated the total wrongful gains. For OpenAI, he calculated figures between $65.50 billion and $109.43 billion. For Microsoft, the range was $13.30 billion to $25.06 billion.
Musk's filing indicates he also plans to seek punitive damages. He may request an injunction, though the filing did not provide specific details about this potential measure.
Opposition from OpenAI and Microsoft
OpenAI and Microsoft filed a response in court early Saturday. They strongly attacked Wazzan's conclusions and requested that he not be permitted to repeat them during the trial. Lawyers for the companies argued that Musk is seeking up to 2,900 times his original investment in the startup.
The legal team for OpenAI and Microsoft wrote a scathing critique. "Wazzan's methodology is made up; his results unverifiable; his approach admittedly unprecedented; and his proposed outcome — the transfer of billions of dollars from a nonprofit corporation to a donor-turned competitor — implausible on its face," they stated.
Recent Developments at OpenAI
OpenAI, the creator of ChatGPT, announced a significant restructuring in October. The company revealed it had granted a 27% ownership stake to its longtime backer, Microsoft. This transition is designed to keep the startup's nonprofit arm in control of its for-profit operations.
The legal drama continues to unfold as all parties prepare for the April trial. The outcome could have profound implications for the future of artificial intelligence development and corporate partnerships in the tech industry.
