Elon Musk sues OpenAI and Microsoft, alleges fraud and seeks upto $134 bn

Elon Musk has sued OpenAI and Microsoft for fraud and seeks $79bn to $134 bn in damages. He accused them of defrauding him and sought a share in the “wrongful gains” they received from his seed money. He alleged that OpenAI and Microsoft defrauded him by claiming it to be a non-profit and now pivoting to a profit model for personal and commercial gain.

Musk made an initial investment of $38 million, which was approximately 60 per cent of OpenAI's initial seed funding. OpenAI gained between $65.5 billion and $109.4 billion because of its contribution during 2015, and Microsoft gained around $13.3 billion and $25.1 billion. Musk later left OpenAI in 2018 and started xAI, his own chatbot, Grok. Both companies have undergone a merger and restructuring and violated their founding mission, so his entitled to the gains.

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"Just as an early investor in a startup company may realise gains many orders of magnitude greater than the investor's initial investment, the wrongful gains that OpenAI and Microsoft have earned – and which Mr Musk is now entitled to disgorge – are much larger than Mr Musk's initial contributions," read a court filing by Musk.

OpenAI has dismissed the lawsuit as “baseless” and a campaign of “harassment”. Musk's damage valuation was put forward by his expert, C. Paul Wazzan. It also states that Musk may seek punitive damages and other penalties. In response, OpenAI and Microsoft have urged the judge to restrict what the expert can present. They argued that the analysis is “made up,” “unverifiable” and “unprecedented”. The companies also said that it seeks huge figures as a competitor from a non-profit to a former donor.

A judge in Oakland, California, ruled this month that a jury will hear the trial, expected to start in April.