FOLLOW US

OpenAI and Microsoft have filed motions in a California federal court urging the dismissal of Elon Musk’s antitrust and breach of contract lawsuit, which alleges that OpenAI abandoned its nonprofit mission in favor of a profit-driven structure. The motions, filed separately on Friday, argue that Musk’s claims are conclusory, lack legal merit, and are fueled by competitive motives rather than legitimate grievances.

Musk’s Lawsuit Claims OpenAI Betrayed Its Mission

Musk initially sued OpenAI and its CEO, Sam Altman, in February 2024, claiming the company misled early investors, including himself, by falsely promising to remain a nonprofit dedicated to open AI research. According to Musk, OpenAI’s transition to a “capped profit” model—and its multibillion-dollar partnership with Microsoft—represented a breach of its founding principles.

In August 2024, Musk re-filed his lawsuit in federal court, expanding his claims to include fraud, conspiracy, false advertising, and breach of an implied contract. He later added Microsoft—OpenAI’s largest financial backer—along with Microsoft executive Deannah Templeton, venture capitalist Reid Hoffman, and California Attorney General Rob Bonta as defendants.

OpenAI: Musk’s Claims Are “Stale and Invented”

In its motion to dismiss, OpenAI asserted that Musk’s claims are baseless, arguing that he willingly supported the company’s shift toward a for-profit model in 2018 after his failed attempt to take control of the organization.

The company further emphasized that Musk continued donating to OpenAI even after learning about the capped-profit model in early 2019, suggesting his lawsuit is motivated by his own competitive interests—namely, the 2023 launch of his rival AI company, xAI.

Microsoft: Musk’s Lawsuit Is Legally Flawed

Microsoft, which has invested approximately $13 billion in OpenAI, similarly dismissed Musk’s claims as unfounded and lacking specificity. The tech giant argued that it has no direct involvement in OpenAI’s nonprofit-to-profit transition and should not be dragged into the dispute.

Microsoft also disputed Musk’s allegations that it engaged in anti-competitive practices, refuting claims that it agreed not to fund OpenAI’s competitors, including Musk’s xAI.

Government Agencies Weigh In on Board Overlap Concerns

The U.S. Department of Justice (DOJ) and the Federal Trade Commission (FTC) have been investigating OpenAI and Microsoft’s partnership, particularly regarding alleged board interlocks.

Musk’s lawsuit argues that Hoffman and Templeton improperly served on both OpenAI’s and Microsoft’s boards, violating Section 8 of the Clayton Act, which prohibits executives from serving on competing companies' boards. While both individuals have since stepped down, the FTC and DOJ have argued that their past roles could still be legally relevant.

California Attorney General Moves to Dismiss

California Attorney General Rob Bonta, whom Musk named as a defendant, also filed a motion to dismiss, arguing he is immune from suit under the Eleventh Amendment. Musk had requested Bonta to join his lawsuit as a plaintiff but, after receiving no response, added him as a defendant instead.

What’s Next? Court to Rule on Motions

With OpenAI, Microsoft, and Bonta all seeking dismissal, the case now awaits a federal judge’s decision on whether it will proceed or be thrown out. Meanwhile, the FTC’s ongoing investigation into OpenAI and Microsoft’s relationship could further influence the case.

Musk, who is represented by Marc Toberoff and Jaymie Parkkinen of Toberoff & Associates PC, has not yet responded to the motions to dismiss.