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Little love has been lost between Elon Musk and Sam Altman.
The two billionaires have been openly feuding for many years now, despite founding OpenAI together over a decade ago. Musk left the organization in 2019 over disagreements with leadership — and the falling out has only grown since then.
Musk has filed several lawsuits against the ChatGPT maker, most recently alleging it had breached its fiduciary duties by turning what was once a non-profit “charity” into a profit-maximizing corporate behemoth. OpenAI denies these allegations, arguing that Musk was “motivated by jealousy” after being pushed out for demanding to merge OpenAI with Tesla and assume majority control.
The stakes rose exponentially this week as a trial for Musk’s lawsuit against the company, initially filed in 2024, kicked off in an Oakland courthouse. Musk is demanding that OpenAI to undo its recent conversion into a for-profit entity, sack Altman and his board, and $130 billion in damages, which his lawyers refer to as “ill-gotten gains.”
The anxiously-awaited legal proceedings could have vast implications not just for OpenAI — which is rumored to be plotting an IPO — but for the AI industry as a whole. OpenAI is shackled to most of the industry’s biggest players through multibillion-dollar contracts, meaning that if it were to make concessions, lose its status as a for-profit company, and its CEO, it could send major ripple effects across an already shaky industry.
If Musk were to win — a decision that could materialize at the end of an estimated three weeks of legal proceedings — the effects could tear apart the already-widening cracks in Silicon Valley’s all-in, trillion dollar bet on AI, effectively popping the “AI bubble” which experts have warned about for years now.Analysts have long grown wary that the industry’s unprecedented levels of spending are making any hope of an eventual return on investment a long shot, meaning that a massive legal setback for OpenAI could therefore set off a powder keg of pent-up anxiety.
A loss for OpenAI could also set a dangerous legal precedent.
“The broader question of whether AI labs founded as charities can lawfully pivot into commercial enterprises would be settled, at least in California,” as University of Sydney media and communications researcher Rob Nicholls argues in a piece for The Conversation. “This has potential implications for Anthropic and other mission-driven peers.”
Besides, plenty of damage has already been done. The trial “has already pried open Silicon Valley’s normally sealed boardrooms, surfacing diaries, Slack threads and HR memos that paint an unflattering portrait of OpenAI’s governance,” Nicholls noted.
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