Musk seeks up to $134 billion from OpenAI, Microsoft in fraud lawsuit

By Robert Burnson

 

Elon Musk wants OpenAI Inc. and Microsoft to pay him damages in the range of $79 billion to $134 billion over his claims that the generative AI company defrauded him by abandoning its nonprofit roots and partnering with the software giant. 

Musk’s lawyer detailed the damages request in a court filing Friday, a day after a federal judge rejected a final bid by OpenAI and Microsoft to avoid a jury trial set for late April in Oakland, California.

 

Citing calculations by a financial economist expert witness, C Paul Wazzan, the filing says Musk is entitled to a chunk of OpenAI’s current $500 billion valuation after he was defrauded of the $38 million in seed money he donated to OpenAI when he helped found 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,” Musk lawyer Steven Molo wrote.

 

Musk left OpenAI’s board in 2018, launched his own artificial intelligence company in 2023 and began a court battle in 2024 with Sam Altman over the OpenAI co-founder and chief executive officer’s plans to operate the company as a for-profit business. OpenAI and Microsoft have denied his allegations.

 

“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 said in a statement. “This latest unserious demand is aimed solely at furthering this harassment campaign.”

 

OpenAI has warned investors to expect Musk to make attention-grabbing claims as the legal fight heads to trial.

 

Microsoft declined to comment.

 

OpenAI, the maker of ChatGPT, announced its restructuring in October. It said at the time that it had given a 27% ownership stake to its longtime backer Microsoft in a transition that will keep the startup’s nonprofit arm in control of its for-profit operations. 

 

Altman has denounced Musk’s lawsuit challenging OpenAI’s restructuring as a weaponization of the legal system to slow down a competitor.

 

Wazzan, the expert witness, calculated the damages request by combining Musk’s financial and non-monetary contributions, including technical and business advice, to OpenAI, according to the filing. He figured that the wrongful gains total $65.50 billion to $109.43 billion for OpenAI and $13.30 billion to $25.06 billion for Microsoft. 

 

Musk’s filing says he also plans to seek punitive damages.