Musk adds Microsoft to OpenAI lawsuit, accusing them of an AI monopoly

• Elon Musk has added Microsoft as a defendant in an amended lawsuit against OpenAI.
• The lawsuit, which also adds Reid Hoffman as a defendant, accuses Microsoft and OpenAI of forming a monopoly.
• Musk claims OpenAI is trying to “starve” rivals of AI talent by offering “abundant compensation” to staff.

Elon Musk has amended a lawsuit against OpenAI to name Microsoft as a defendant, calling their partnership a “de facto merger” and accusing them of anticompetitive practices.

The lawsuit, filed Thursday, also names Reid Hoffman, a Microsoft board member and former OpenAI board member, as a defendant. It also names Musk’s startup, xAI, and Shivon Zilis, the mother of three of his children, as plaintiffs. Zilis was previously a board member of OpenAI and is now an executive at Neuralink, Musk’s brain implant company.

The complaint accuses OpenAI and Microsoft of creating an AI monopoly and engaging in “intensified” anti-competitive practices, citing “excessive compensation” offers as an example.

Attorneys for Musk said in the amended complaint, filed in a federal court in Northern California, that “OpenAI has attempted to starve competitors of AI talent by aggressively recruiting employees with offers of generous compensation, and is on track to To spend $1.5 billion on staff for just 1,500 employees.”

Bloomberg earlier reported that some OpenAI employees earn up to $800,000 per year, including bonuses and stock awards. It also said most OpenAI engineer roles pay between $200,000 and $370,000, according to job postings it reviewed.

Musk’s lawyers said the defendants “own nearly 70% share of the generative AI market, which constitutes a monopoly or, alternatively, an attempt or conspiracy to monopolize the generative AI market.”

The lawsuit describes Microsoft’s partnership with OpenAI as a “de facto merger” and said: “Microsoft is now OpenAI, and OpenAI, Microsoft.” It refers to a New York Times report last month, which said Microsoft AI chief Mustafa Suleyman is among a group of Microsoft employees working out of the OpenAI office in San Francisco.

The amended lawsuit is the latest escalation between longtime rivals Musk and OpenAI CEO Sam Altman. Musk first OpenAI and co-founders Altman and Greg Brockman sued in March accused the company of jeopardizing its nonprofit mission by partnering with Microsoft, which has invested more than $13 billion in the startup. OpenAI responded to the lawsuit by called it “incoherent” and “contradictory.”

Musk, who helped found OpenAI in 2015 dropped his lawsuit without explanation. He filed the latest lawsuit in Augustarguing that OpenAI had abandoned its founding mission to develop AI beneficial to humanity by putting commercial interests first, and claiming that he was “misled” into co-founding the company. OpenAI said yes in September transition to a for-profit governance structure.

The current lawsuit alleges that OpenAI acted in an anti-competitive manner by asking investors in its most recent funding round not to invest in competitors, including Musk’s startup xAI. The suit refers to a report from the Financial Times in October, stating that this was one of the conditions imposed on potential investors for the $6.6 billion financing round which closed last month.

As part of that round, SoftBank committed $500 million to OpenAI. Navneet Govil, chief financial officer of SoftBank’s Vision Funds previously told Business Insider that SoftBank still has the option to invest in other AI companies. Govil told BI’s Hasan Chowdhury: “We believe that if it is a disruptive company and the addressable market is large, there is room for more than one player.”

Microsoft, OpenAI and Hoffman did not immediately respond to requests for comment from Business Insider made outside of normal business hours. In September, Hoffman called Musk’s lawsuit against OpenAI a case of “sour grapes.”