The highly anticipated Musk v. Altman trial recently concluded its closing arguments, with attorneys making their final appeals. They aimed to convince the judge and jury that their clients, Elon Musk and Sam Altman, were the true guardians of OpenAI’s original nonprofit mission. A judgment in this decade-long legal battle, pitting two tech titans against each other, could be delivered as early as next week.
Regardless of the verdict, it’s clear there are significant losers in this saga. Ample evidence suggests the biggest casualties are the employees, policymakers, and the public who initially believed in OpenAI’s nonprofit vision and supported it. For Musk and other co-founders, the priority often seemed to be establishing the world’s leading AI lab, even if that meant evolving into a multi-billion dollar for-profit entity.
The Public Interest at Risk
“It’s hard to see how the public interest is being protected by either of these parties, and that is really what is ultimately at stake in a case about a nonprofit,” noted Jill Horwitz, a Northwestern University law professor specializing in nonprofits and innovation. Horwitz, who attended the closing arguments, emphasized that “The public interest in the nonprofit is at risk no matter who wins.” OpenAI’s stated goal is to ensure artificial general intelligence (AGI) benefits humanity, yet humanity itself is not a party to this lawsuit.
For the past decade, OpenAI has essentially been in a race to build AGI first, often rivaling multi-trillion-dollar companies like Google. Simultaneously, Musk and Altman have fiercely contended for control over the organization. Daniel Kokotajlo, a former OpenAI researcher who raised concerns about the company’s safety culture, commented, “Musk and Altman are basically locked in a race to be the first to build superintelligence, and they both rightly fear what the other will do if they win. The rest of us should fear them both.”
Kokotajlo was part of a group of former OpenAI researchers who filed an amicus brief against OpenAI’s conversion to a for-profit structure. They argued that the nonprofit framework was crucial to their decision to join the company. During the trial, OpenAI’s nonprofit arm was discussed almost like another corporate investor, with lawyers claiming its $200 billion stake in the for-profit entity proved its mission fulfillment. However, public advocacy groups contend that financial backing alone is insufficient.
Nathan Calvin, VP of state affairs for the AI safety nonprofit Encode, highlighted that while philanthropic resources are welcome, the nonprofit also has a critical governance role. He explained, “the mission of the nonprofit is not that of a typical foundation; it is specifically to ensure that AGI benefits all of humanity. Money is important for that goal, and is useful all else equal, but it is not the goal in and of itself.”
The Evolution from Nonprofit to Profit
Evidence presented suggests both Altman and Musk initially agreed on OpenAI operating as a nonprofit, much like a typical startup, with the shared ambition of surpassing Google DeepMind in the AGI race. However, the nonprofit structure eventually became a perceived hurdle to winning that very race. Musk accuses Altman and co-founder Greg Brockman of deviating from the founding mission, claiming they leveraged his $38 million investment to transform OpenAI into an $850 billion company and enrich themselves.
To succeed, Musk must prove he imposed specific conditions on his investment, mandating its use solely for charitable purposes, and that his lawsuit was timely. OpenAI, conversely, argues Musk failed to substantiate these claims, suggesting his actions stem from “sour grapes” over losing control. Interestingly, an email from Altman to Musk in May 2015, discussing the setup of “some sort of nonprofit,” mentioned “startup-like compensation” for those involved, to which Musk responded it was “worth a conversation.”
Little at trial clarified what the partners would do if the nonprofit amassed surplus funds. While open-sourcing technology was discussed, OpenAI’s lawyers maintained no formal agreement existed. The practical focus seemingly shifted to acquiring expensive servers for more powerful AI models, albeit with concurrent research into safeguards.
OpenAI lawyer Sarah Eddy stated in her closing argument that it was “uncontested” among co-founders that donations alone wouldn’t sustain their ambition. She quoted Ilya Sutskever’s testimony that “the mission of OpenAI is larger than a structure,” asserting that without necessary funds, the mission would have collapsed. The co-founders themselves acknowledged the strategic value of the nonprofit structure, using its “moral high ground” to attract talent and goodwill from policymakers and the public in their pursuit to outcompete Google DeepMind.
A Roadblock to Business Expansion
Despite its early benefits, the nonprofit structure was increasingly viewed as an impediment to OpenAI’s growth into a massive business. In December 2016, Musk emailed co-founders, suggesting setting up OpenAI as a nonprofit “might, in hindsight, have been the wrong move” and noting a reduced “sense of urgency.” The following year, attempts were made to create a for-profit arm, or even scrap the nonprofit entirely, but these talks failed when Musk demanded control and Brockman and Sutskever sought significant equity stakes. Around this time, Brockman even noted in his diary how OpenAI could make him a billionaire.
In February 2018, Musk proposed integrating OpenAI into Tesla, his for-profit car company, even offering Altman a Tesla board seat to run the AI unit. Shivon Zilis, Musk’s deputy, noted that Altman and Brockman hadn’t “internalized the advantages of burying this in Tesla for stealth advantage,” and an internal FAQ she wrote suggested the proposed Tesla AI group’s strategy “may be deeply proprietary.” Microsoft CTO Kevin Scott questioned whether early donors like Reid Hoffman were comfortable with OpenAI becoming a for-profit. Hoffman, however, expressed no objections, and Microsoft later expanded its support for OpenAI after its for-profit arm launched.
During the brief ouster of Altman in November 2023, extensively revisited in this trial, text messages revealed Altman and Microsoft CEO Satya Nadella personally selected new nonprofit board members. Altman presented these choices as conditions for his return, stating he was “willing to run back into a burning building.” OpenAI attorney William Savitt emphasized that no other AI company in the world operates under a nonprofit, asserting that “OpenAI remains a charity … more stronger and powerful than ever.”
The Fading Shine of the Nonprofit Mission
Despite its unique structure, OpenAI faces challenges common to tech giants. The company has been accused of negligence and wrongful death in lawsuits by ChatGPT users and their families, alleging contributions to suicides, drug overdoses, and mass shootings. OpenAI supported an Illinois bill that would shield AI labs from liability for societal disasters, a stance opposed by rival Anthropic. Furthermore, media companies have sued OpenAI for copyright infringement, and current and former employees claim its economic research unit has become a corporate advocacy arm.
OpenAI defends its work, launching initiatives to address AI’s societal impacts and implement safeguards. Competitors like Google DeepMind and Meta face similar allegations. As OpenAI pursues ever-higher valuations, it becomes increasingly indistinguishable from these profitable, publicly traded companies. While the nonprofit mission once polished OpenAI’s public image, the Musk v. Altman trial appears to have stripped away much of its remaining luster.
Source: Wired – AI
