Elon Musk files suit against Microsoft `subsidiary` OpenAI for Closed Nature

Elon Musk, in a legal filing on Thursday (pdf) , contends that Sam Altman and OpenAI have forsaken their initial commitment to developing artificial intelligence (AI) for the betterment of humanity, instead prioritizing profits. Filed in San Francisco Superior Court, Musk alleges that OpenAI’s collaboration with Microsoft has transformed the company into a closed-source subsidiary serving the interests of the tech giant rather than the public.

“OpenAI, Inc. has been transformed into a closed-source de facto subsidiary of the largest technology company in the world: Microsoft. Under its new board, it is not just developing but is actually refining an AGI to maximize profits for Microsoft, rather than for the benefit of humanity,” Musk claims in the suit.

Musk’s Legal Action

Musk’s legal action includes charges of breach of contract, breach of fiduciary duty, and unfair business practices against OpenAI. He seeks a return to an open-source model and an injunction to prevent OpenAI, its president Gregory Brockman, CEO Sam Altman, and Microsoft from capitalizing on the company’s artificial general intelligence technology.

Artificial general intelligence, designed to perform at human cognitive levels, has been OpenAI’s primary objective, exemplified by its GPT-4 release in March 2023. However, Musk contends that GPT-4 remains a closed model driven by commercial motives, contrary to the company’s original ethos.

“The internal details of GPT-4 are known only to OpenAI and, on information and belief, to Microsoft. GPT-4 is hence the opposite of ‘open AI,’” Musk asserts in the suit. “And it is closed for propriety commercial reasons: Microsoft stands to make a fortune selling GPT-4 to the public, which would not be possible if OpenAI—as it is required to do—makes the technology freely available to the public.”

Microsoft takes the Wheel of OpenAI

Musk also highlights the 2023 removal and subsequent reinstatement of Altman as CEO, linking it to Microsoft’s intervention and the reshaping of the board. He claims that the current board lacks the technical expertise in AI and AGI policy that was integral to the organization’s initial structure.

“OpenAI, Inc.’s once carefully crafted non-profit structure was replaced by a purely profit-driven CEO and a Board with inferior technical expertise in AGI and AI public policy. The board now has an observer seat reserved solely for Microsoft,” Musk alleges.

Musk suggests that the Microsofts influence prevents OpenAI from declaring GPT-4 as AGI to safeguard its proprietary and profitable nature. Despite Musk’s concerns, Microsoft maintains that GPT-4 has not achieved AGI status, justifying its continued licensing privileges.

Statements from Microsoft CEO Satya Nadella also suggest an an influence that goes beyond mere licensing privileges.

‘[W]e were very confident in our own ability. We have all the IP rights and all the capability. If OpenAI disappeared tomorrow, I don’t want any customer of ours to be worried about it quite honestly, because we have all of the rights to continue the innovation. Not just to serve the product, but we can go and just do what we were doing in partnership ourselves. We have the people, we have the compute, we have the data, we have everything.’ - Satya Nadella, Microsoft CEO

‘We are in there. We are below them, above them, around them. We do the kernel optimizations, we build tools, we build the infrastructure. So that’s why I think a lot of the industrial analysts are saying, “Oh wow, it’s really a joint project between Microsoft and OpenAI.” The reality is we are, as I said, very self-sufficient in all of this.’ - Satya Nadella, Microsoft CEO

Microsoft Hedging its Bets

Musk’s suit comes at a time when Microsoft is doubling down on its AI investments, particularly in the AGI space. The recent investment in Mistral AI left some EU lawmakers questioning whether Mistral had lobbied on Microsoft’s behalf, and the extent of the French government’s knowledge of the partnership.

“That story seems to have been a front for an American-influenced big tech lobby,” Kim van Sparrentak, an EU lawmaker who worked closely on the AI Act, shared with Reuters. “The Act almost collapsed under the guise of no rules for ‘European champions’, and now look. European regulators have been played.”

The investment in Mistral AI, a rival to OpenAI should raise eyebrows. To OpenAI it serves as a reminder that Microsoft has a plan B, and to regulators it should serve as a reminder that Microsoft is not just a passive investor in AI, but an active participant in the shaping of the AI landscape.

As the OpenAI reverse coup was heralded as a brilliant move by Microsoft’s CEO, Satya Nadella, in actuality, Microsoft’s shared stood to plummet if the core of their AI strategy was flipped on its head. The move was a necessity, and it’s execution was brute force. What it did was providing Microsoft time to bolster its AI capabilities ahead of future OpenAI turmoil.

The Future of OpenAI and Microsoft?

Musk’s suit is a bold move, and it’s not clear what the outcome will be. It’s clear that OpenAI is not the same organization it was when it was founded. It’s also clear that Microsoft has positioned itself for the possibility that OpenAI may not be the future of AGI. The future of AGI is still uncertain, but it’s clear that Microsoft is hedging its bets.

Disclaimer

OpenAI is not technically a subsidiary of Microsoft, but the relationship between the two companies is close enough that it’s not a stretch to call it a subsidiary. The term “subsidiary” is used in this article to emphasize the close relationship between OpenAI and Microsoft and references the suit filed by Elon Musk.