Billionaire entrepreneur Elon Musk has intensified his legal battle against OpenAI, with his attorney, Marc Toberoff, urging the Attorney Generals of California and Delaware to oversee a competitive auction to establish the fair market value of OpenAI’s charitable assets. The request comes as OpenAI transitions from its non-profit roots to a hybrid structure, drawing scrutiny over its valuation and compliance with fiduciary responsibilities.
The letter, sent Tuesday, argues that competitive bidding is necessary to protect public interest in OpenAI’s assets. The startup, co-founded by Musk and others in 2015, gained global prominence with the release of ChatGPT in 2022 and was recently valued at $157 billion following substantial investments, including $6.6 billion from Microsoft.
OpenAI’s Response and Restructuring Plans
OpenAI, now operating with significant for-profit ventures, plans to create a public benefit corporation to separate its for-profit operations from its non-profit oversight. The organization claims this move will enable unprecedented fundraising capabilities while ensuring robust non-profit funding.
An OpenAI spokesperson responded to Musk’s legal actions, stating, “Elon is engaging in lawfare. We remain focused on our mission and work.” OpenAI has also emphasized that independent financial advisors will assess the valuation of its charitable assets.
Legal Challenges and Stakeholder Opinions
Musk, who now leads his own AI venture, xAI, has filed lawsuits aimed at blocking OpenAI’s corporate restructuring. He contends that the proposed transition departs from the original mission he helped fund.
Delaware Attorney General Kathy Jennings has acknowledged the case and submitted an amicus brief to the court, signaling close monitoring of OpenAI’s restructuring plans. California Attorney General Rob Bonta has yet to comment, despite a request from Meta urging intervention.
Darryll Jones, a law professor at Florida A&M University, suggested that Delaware’s active involvement may reduce the likelihood of Musk obtaining an injunction.
Background and Implications
Musk’s lawsuit and the broader scrutiny of OpenAI’s restructuring underscore ongoing debates about the balance between profit motives and the ethical oversight of AI technologies. Critics, including Musk and the AI safety non-profit Encode, warn that the restructuring could undermine public trust and mission-driven innovation in the AI sector.
The court is expected to rule on Musk’s motion for a preliminary injunction later this month, a decision that could have far-reaching implications for OpenAI and the broader AI industry.
