In attempting to find a jury in the case of Musk v. Altman, US District Judge Yvonne Gonzalez Rogers chose to widen the pool of potential candidates for selection. That figures: To many Californians, being asked to side with either Elon Musk or Sam Altman is like deciding between getting a slap in the face or a knee to the groin.
But decide they must, and their decision will have profound consequences for OpenAI and the broader artificial-intelligence landscape. Altman is accused of illegally converting OpenAI from nonprofit to for-profit. Musk is demanding that the structure be reverted, that Altman and OpenAI President Greg Brockman be removed as executive officers and that the company pay him $134 billion in damages — funds he said he would donate to the reformed nonprofit.
The stakes for OpenAI are existential at worst and a serious burden at best as it seeks to go public. In preparation, the company has taken spring cleaning to the next level — embarking on a culling of “side quests” like the video creator Sora, ending some science research and even putting on hold its plans for an erotic version of ChatGPT. All this comes as the competitive landscape for AI tools intensifies and OpenAI’s early lead thanks to ChatGPT risks being further chiseled away. The Wall Street Journal reported on Tuesday that OpenAI has missed internal targets for user and revenue growth.
A day earlier, it was able to loosen the shackles of its deal with Microsoft Corp. that had long turned sour. OpenAI can now work with other cloud-computing firms to get the power it needs to keep expanding and gain much-needed enterprise customers. The deal between Microsoft and OpenAI, which had been seen as a significant boon for both firms just a couple of years ago, had risked turning ugly: Microsoft had considered suing at one point, according to a report.
But while these baggage-shedding moves improve OpenAI’s IPO prospects, they will hardly matter if the ChatGPT maker comes worse off in this nasty spat with Musk. Bloomberg Intelligence puts the chances of OpenAI losing at 60%. If the jury sides with Musk, it will, at the very least, greatly slow down OpenAI’s progress toward the public markets, even if the company can eventually win on appeal. If that fails, it’s hard to see how a nonprofit OpenAI would be able to attract the necessary funding to continue its current massive loss-making operations.
Both Altman and Brockman were in attendance for jury selection on Monday. We’re expecting to see them both again on the stand, along with other cast members from the OpenAI soap opera that has played out over the past few years. Former Altman colleagues like Mira Murati and Ilya Sutskever — who left in the wake of the failed ousting of Altman in late 2023 — are both expected to appear.
On the eve of jury selection, OpenAI published some updated “principles” on making sure the technology it makes is democratized and does not further concentrate power in the hands of a few technology companies. Despite being valued at $852 billion, OpenAI can attempt to convince jurors that up against the likes of Amazon.com Inc., Alphabet Inc. and Meta Platforms Inc. — valued in the trillions — it is a relative minnow, an independent AI company to root for.
That would be an extremely tough sell to a California jury were it not for the fact Altman’s opponent is Musk. Core to Altman’s defense will be questioning Musk’s true motive: Is he looking out for the good of humanity and AI or seeking to protect his own effort, xAI, which is trailing OpenAI and other AI players in both sophistication and market share? “This lawsuit has always been a baseless and jealous bid to derail a competitor,” OpenAI posted on X this week.
That derailing has arguably already had the desired effect, regardless of what happens from here on in. Musk can claim to be a winner even if he ultimately loses the case. Slowing OpenAI down, complicating its chances to raise more capital, is a victory for him however you slice it. SpaceX, which is now the parent of xAI, is almost certain to go public before OpenAI and enjoy a boost from investors eager to buy into new AI stocks. That makes this case little more than a business expense for Musk: a few days in court where yet more damaging internal drama about a competitor will become public. For Altman and his company, the costs could be far, far greater.
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