OpenAI slams 'sham' takeover bid by wannabe 'AGI dictator' Musk in countersuit

Billionaire 'tried every tool to harm us', says super lab, and it wants judge to end 'harassment'

OpenAI has countersued co-founder Elon Musk, accusing him of unlawful and unfair tactics to derail its restructuring plans and demanding a judge hold him liable for damage allegedly inflicted on the AI super-lab.

The sizable countersuit [PDF] and answer to Musk's assertions was filed in California federal court yesterday. While it accuses the Tesla tycoon of a wide range of behavior intended to undermine OpenAI's operations, including "harassment, interference, and misinformation," the countersuit's two claims for relief zero in on Musk's February attempt to buy the ChatGPT maker for $97.375 billion. While Musk's team has portrayed the offer as genuine, OpenAI's lawyers call it something else entirely.

Rather than a serious acquisition bid, OpenAI claims Musk's move was a "sham" designed "to interfere with OpenAI's contemplated corporate restructuring." Musk is no longer involved in OpenAI, and runs a rival artificial intelligence outfit, xAI, among other businesses.

"The letter included no evidence of financing to pay the nearly $100 billion purchase price," OpenAI said in its countersuit filing, adding that none of the investors listed in Musk's letter of intent had done any due diligence. One investor later admitted, per court records, that Musk's intent was to gain access to OpenAI's internal materials through the legal proceedings and "get behind the wall" at the Microsoft-backed super lab. 

"Although OpenAI recognized the bid as a feint, its mere existence - and the media firestorm surrounding it - required OpenAI to expend significant resources in responding to it," the AI giant said.

It's that effort, and the so-called "sham bid," that led OpenAI to accuse Musk of unfair and fraudulent business practices, as well as tortious interference with prospective economic advantage (ie, when a third party disrupts a potential deal to the plaintiff's detriment).

OpenAI is seeking injunctive relief to stop Musk's alleged interference and restitution for the resources it claims were wasted responding to his bid.

We asked OpenAI what it hoped to achieve, and it directed us to the court filing and to its comments made on Musk's X, where the AI biz said the countersuit was meant to put a stop to his "bad-faith tactics to slow down OpenAI and seize control of the leading AI innovations for his personal benefit." 

[Musk] tried to seize control of OpenAI and merge it with Tesla as a for-profit - his own emails prove it. When he didn't get his way, he stormed off

"Elon's never been about the mission. He's always had his own agenda," OpenAI continued. "He tried to seize control of OpenAI and merge it with Tesla as a for-profit – his own emails prove it. When he didn't get his way, he stormed off."

The very brief history of a billionaire feud

For those who've tried their best to ignore Musk and OpenAI chief Sam Altman's feud, a bit of history may be necessary. 

Musk was one of OpenAI's co-founders, but he stormed off in 2018 following internal disagreements over control and strategic direction. OpenAI alleges the SpaceX oligarch proposed merging OpenAI with Tesla (which has AI-powered self-driving goals) or sought full control, which the Altman outfit declined, leading to his exit.

At one point, OpenAI's leadership feared Musk would become a "dictator" of AGI, or powerful artificial general intelligence, if he was allowed complete control over the lab, judging from emails surfaced during this legal battle.

"You stated that you don’t want to control the final AGI, but during this negotiation, you’ve shown to us that absolute control is extremely important to you," OpenAI co-founder and mega-boffin Ilya Sutskever wrote to Musk. "The goal of OpenAI is to make the future good and to avoid an AGI dictatorship."

In March 2024, Musk sued OpenAI and Altman alleging breach of contract, unfair business practices, and fiduciary failures related to OpenAI's close association with Microsoft and the establishment of a for-profit subsidiary. (OpenAI started out as a non-profit.)

Musk withdrew this lawsuit in June last year without providing a public reason, but filed a nearly identical one a couple months later. He claimed OpenAI's shift toward a for-profit model contradicted its original mission of developing AI for the benefit of humanity.

OpenAI's legal team described Musk's complaint as "lurch[ing] from theory to theory, distort[ing] its own exhibits, and trad[ing] from start to finish on fact-free and often ad hominem conclusions."

OpenAI denies it's becoming a solely for-profit company, claiming in its countersuit that its restructuring plan would only see its for-profit subsidiary become a public benefit corporation. That move is necessary, OpenAI asserted, to allow the outfit to better compete for capital "in service of the mission to develop AGI for the benefit of humanity." That said, OpenAI continues to raise tens of billions of dollars in funding, $40 billion as recently as late March.

An OpenAI spokesperson further told The Register it had no intention to abandon its non-profit core. 

"Our board has been very clear that we intend to strengthen the non-profit so that it can deliver on its mission for the long term," OpenAI told us. "We're not selling it, we're doubling down on its work." 

OpenAI also pointed us to last week's announcement of a commission comprising experts in health, science, education, and public services to guide the org's planned evolution.

"We look forward to the input and advice from leaders who have experience in community-based organizations on how we can help them achieve their missions," OpenAI said in an emailed statement. 

However, OpenAI reportedly has to complete its transition to a for-profit entity by the end of 2025 to secure that aforementioned $40 billion in funding led by SoftBank. 

Musk's lawsuit is likely to only slow that down, especially since the trial, per a pretrial order this week, isn't set to begin until March 2026.

Neither Musk – famously now President Trump's éminence grease – nor his legal team responded to questions for this story. ®