Musk targets $134 billion from OpenAI, Microsoft in fraud case
Elon Musk is seeking damages from OpenAI Inc. and Microsoft, estimating the amount to be between $79 billion and $134 billion. He alleges that the generative AI company deceived him by straying from its nonprofit origins and forming a partnership with the software giant. Musk’s lawyer outlined the damages request in a court filing on Friday, following a federal judge’s rejection of OpenAI and Microsoft’s last attempt to evade a jury trial scheduled for late April in Oakland, California. Citing calculations by financial economist expert witness C Paul Wazzan, the filing states that Musk is entitled to a portion of OpenAI’s current $500 billion valuation after he was defrauded of the $38 million in seed money he contributed to OpenAI when he co-founded the startup in 2015.
“Just as an early investor in a startup company may realize 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,” Steven Molo wrote. Musk departed from OpenAI’s board in 2018, established his own artificial intelligence company in 2023, and initiated a legal dispute in 2024 with Sam Altman regarding the OpenAI co-founder and CEO’s intentions to run the company as a for-profit entity. OpenAI and Microsoft have refuted his claims. “Mr Musk’s lawsuit continues to be baseless and a part of his ongoing pattern of harassment, and we look forward to demonstrating this at trial,” OpenAI stated. “This latest unserious demand is aimed solely at furthering this harassment campaign.”
OpenAI has cautioned investors to anticipate Musk making sensational assertions as the legal battle approaches trial. Microsoft has chosen not to provide a comment. OpenAI, the creator of ChatGPT, revealed its restructuring in October. At that time, it was stated that a 27% ownership stake had been granted to its longtime backer Microsoft, in a transition designed to ensure that the startup’s nonprofit arm retains control over its for-profit operations. Altman has criticized Musk’s lawsuit against OpenAI’s restructuring, describing it as a misuse of the legal system aimed at hindering a competitor.
Wazzan, the expert witness, assessed the damages claim by aggregating Musk’s financial and non-monetary contributions, which encompassed technical and business guidance, to OpenAI, as detailed in the filing. He estimated that the total wrongful gains amount to between $65.50 billion and $109.43 billion for OpenAI, and between $13.30 billion and $25.06 billion for Microsoft. Musk’s filing indicates that he also intends to pursue punitive damages.
