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Elon Musk told a jury on Wednesday that he was “a fool” to provide initial funding for OpenAI, claiming he believed the $850bn ChatGPT maker would remain a non-profit organisation.
The billionaire was testifying in federal court in Oakland, California, as the first witness in his lawsuit against Sam Altman, OpenAI and its largest shareholder, Microsoft.
“I actually was a fool who [gave] free funding for them to create a start-up,” Musk said. “I gave them $38mn of essentially free funding, which they used to create a . . . for-profit company.”
Musk brought the case claiming he was deceived by a “bait and switch” after OpenAI was created as a non-profit with the billionaire’s support and then launched a for-profit entity, which has since become one of the most valuable start-ups in the world.
His attorneys on Wednesday showed the jury emails between Musk, OpenAI’s chief executive Altman and president Greg Brockman, who were both in court.
The messages from 2017 included early discussions about creating a for-profit, and a proposed ownership breakdown under which Musk would have owned slightly more than half of the company.
After opposition from OpenAI employees, Musk ended the conversation. “Guys I’ve had enough . . . Either go do something on your own or continue with OpenAI as a non-profit,” he wrote in September 2017, adding that it was not an “ultimatum” and the proposed structure was “off the table”.
Altman replied: “I remain enthusiastic about the non-profit structure!”
Musk said in his testimony that he meant that OpenAI’s founders could not “have their cake and eat it too”. They could not have “the positive halo effect of being a non-profit charity and enrich themselves”, he added.
After Musk resigned from the board in 2018, OpenAI received a $1bn investment from Microsoft in 2019, with a capped-profit arrangement. Musk said “there was no basis for me to file a lawsuit at that time because they hadn’t violated the non-profit” principles.
OpenAI has claimed Musk waited too long to bring his case, exhausting the statute of limitations on his claims.
The jury then saw text messages between Musk and Altman where Musk said he was “disturbed to see OpenAI with a $20bn valuation” in late 2022. Microsoft’s investment was formally announced in January 2023.
Altman justified the Microsoft investment, saying there was “no way” to compete “without many billions of dollars”.
“A non-profit doesn’t have a valuation,” Musk told the court. “OpenAI had become for all intents and purposes a for-profit company with a $20bn valuation.”
OpenAI and Microsoft will also get the opportunity to grill Musk on Wednesday. Microsoft is accused of “aiding and abetting” by encouraging OpenAI to prioritise profit and products over its charitable mission.
Musk also referred to a provision in the Microsoft and OpenAI agreement that the for-profit would be dissolved if artificial general intelligence — AI that is akin to or surpasses human intelligence — were achieved.
This clause was scrapped in an amendment to their partnership agreement on Monday.
“With all respect to Microsoft, do you really want Microsoft controlling digital superintelligence?” Musk asked the jury.
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