Elon Musk wants courts to force OpenAI to auction off a large ownership stake

Musk, who founded his own AI startup xAI in 2023, has recently stepped up efforts to derail OpenAI’s conversion.

In November, he tried to block the process with a request for a preliminary injunction filed in California. Meta also supported this lawsuit.

In November legal filings, Musk’s team wrote: “OpenAI and Microsoft’s combined use of Musk’s donations to create a commercial monopoly that now specifically targets xAI is too much.”

Kathleen Jennings, the attorney general of Delaware, where OpenAI is incorporated, has since said her office has a responsibility to ensure OpenAI’s transformation is in the public interest and to determine whether the deal was at a fair price.

Members of Musk’s camp, wary of Delaware authorities after a state judge last month rejected a proposed $56 billion pay package for the Tesla boss, saw it as a rebuke of his efforts to block the transformation and fear it will be rushed through. They also argue that OpenAI’s PBC transformation should take place in California, where the company is headquartered.

In a court filing last week, Musk’s lawyers said Delaware’s approach to the case “does not inspire confidence.”

OpenAI committed to becoming a public benefit corporation within two years as part of a $6.6 billion funding round in October, giving it a valuation of $157 billion. If this does not happen, investors will be able to get their money back.

OpenAI still has a number of issues to resolve, including negotiations over the value of Microsoft’s investment in PBC. The transformation was not imminent and would likely take months, according to a person familiar with the company’s thinking.

An OpenAI spokesperson said: “Elon is a legal professional. We remain focused on our mission and work.” The attorneys general of California and Delaware did not immediately respond to requests for comment.

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