AI giants officially go to court: Musk sues OpenAI and Microsoft for up to $134 billion

Elon Musk has officially filed a lawsuit against OpenAI and its partner Microsoft, seeking damages between $79 billion and $134 billion. The allegations claim that OpenAI has betrayed its non-profit founding mission by shifting to a profit model and forming a deep alliance with Microsoft, constituting fraud. This claim amount is based on the company's current valuation of approximately $500 billion, as well as the $38 million seed funding Musk provided in 2015.

The case is set to go to trial in late April in Oakland, California. Previously, a federal judge rejected motions from OpenAI and Microsoft to avoid a jury trial. OpenAI responded that the lawsuit is "baseless" and stated it will refute the claims in court.

The conflict between Musk and OpenAI began in 2024, centered around his dissatisfaction with co-founder Sam Altman's decision to transition the company to a for-profit structure. Musk resigned from the OpenAI board in 2018 and founded his own AI company in 2023.

Claim Amount Based on Valuation Growth

According to Bloomberg, Musk's attorney Steven Molo cited calculations from financial economics expert C. Paul Wazzan in the submitted court documents, pointing out that Musk should receive a corresponding share of OpenAI's current $500 billion valuation to compensate for the $38 million seed funding he invested due to fraud.

Molo wrote in the documents:

"Just as early investors in startups typically receive returns far exceeding their initial investments, the profits obtained by OpenAI and Microsoft through improper conduct— which Musk is now entitled to recover—also far exceed his initial contribution."

Wazzan's valuation method took into account Musk's financial support for OpenAI as well as non-financial contributions (including technical and business advice), ultimately calculating that the improper gains range from $65.5 billion to $109.43 billion (OpenAI) and $13.3 billion to $25.06 billion (Microsoft). The documents also indicate that Musk plans to further seek punitive damages.

Controversy Over OpenAI's Transformation

In October of last year, OpenAI announced a restructuring plan, confirming that it had granted 27% equity to long-term supporter Microsoft during the transformation process, while emphasizing that its non-profit division still retains control over the for-profit business.

In response to Musk's lawsuit regarding this restructuring, OpenAI CEO Sam Altman previously criticized it as "weaponizing the legal system" with the intent to slow down competitors' development. The company further stated in a recent statement that Musk's "frivolous claims are entirely aimed at advancing his harassment."

As the developer of ChatGPT, OpenAI's transition from a non-profit to a for-profit entity has always been a focal point in the tech industry. The core of Musk's lawsuit is to question the legality of this transformation, accusing it of deviating from the company's established mission of "prioritizing the benefit of humanity."