OpenAI is pushing back at Elon Musk’s lawsuit claiming the generative AI company abandoned its founding goal of being a nonprofit through its tight partnership with Microsoft and plans to ask that all the claims against it be dismissed.

In a blog post this week, OpenAI co-founder and CEO Sam Altman and several other executives – including co-founder and President Greg Brockman – said Musk, an early investor in OpenAI, was onboard with the need to adopt a for-profit structure to be able to raise the billions of dollars needed to reach the goal of creating artificial general intelligence (AGI), the theoretical point when AI systems can learn, comprehend and perform as well as or better than humans.

In fact, Musk, the owner of Tesla, X (formerly Twitter), and SpaceX, said OpenAI should be folded into Tesla to leverage the money-making capabilities of the car manufacturer or that Musk himself should take control of OpenAI, the company executives wrote.

From Nonprofit to For-Profit

Talk of evolving into a for-profit operation arose in 2017, two years after OpenAI was launched, but when Altman and others rejected Musk’s proposals, Musk withheld money from OpenAI and then left.

“We couldn’t agree to terms on a for-profit with Elon because we felt it was against the mission for any individual to have absolute control over OpenAI,” the executives wrote, noting that Musk in an email said OpenAI should “attach to Tesla as its cash cow.” Elon soon chose to leave OpenAI, saying that our probability of success was 0, and that he planned to build an AGI competitor within Tesla.”

He left in February 2018, telling OpenAI “he was supportive of us finding our own path to raising billions of dollars. In December 2018, Elon sent us an email saying ‘Even raising several hundred million won’t be enough. This needs billions per year immediately or forget it.’”

“We’re sad that it’s come to this with someone whom we’ve deeply admired – someone who inspired us to aim higher, then told us we would fail, started a competitor, and then sued us when we started making meaningful progress towards OpenAI’s mission without him,” they wrote.

An Alternative to Google in AGI Race

In his lawsuit, Musk said he was concerned when Google bought deep-learning company DeepMind in 2014 for $400 million, worried that the future of AGI was in the hands of a “closed, for-profit company.” Musk believes, as some others do, that AGI – particularly in the wrong hands – represents an existential threat to humanity, arguing in the lawsuit that “our entire economy is based around the fact that humans work together and come up with the best solutions to a hard task. If a machine can solve nearly any task better than we can, that machine becomes more economically useful than we are.”

He said Altman in 2015 appeared to share his concerns and that he and OpenAI’s founders would form a nonprofit organization to develop AGI to benefit humankind rather than simply make a profit, an agreement that was laid out in the company’s founding agreement and other places in late 2018. For several years, Musk was the primary source of OpenAI’s funding.

However, a year after Altman became CEO in 2019, OpenAI partnered with Microsoft, a company that has invested more than $10 billion in the company. OpenAI agreed to exclusively license its GPT-3 language model to Microsoft, though published a paper on the model’s inner workings so others could use it to create their own models. Regarding AGI, it was left to OpenAI’s board to decide when the company attained it, not Microsoft.

OpenAI and Microsoft

Last year, OpenAI “set the Founding Agreement aflame” by launching GPT-4, a model Musk says is “better at reasoning than most humans.” However, OpenAI kept the internal design secret, available only to the company and possibly Microsoft, a move in contradiction to the founding agreement and the nut of Musk’s breach of contract suit. He claims that “GPT-4 is now a de facto Microsoft proprietary algorithm, which it has integrated into its Office software suite.”

Musk also says that GPT-4 is an AGI model and beyond the scope of Microsoft’s 2020 exclusive agreement with OpenAI. Researchers at Cornell University last year noted that GPT-4 and other new large-language models (LLMs) appeared to be moving closer to AGI, saying they “exhibit more general intelligence than previous AI models” and that in some tasks, “GPT-4’s performance is strikingly close to human-level performance.”

AGI has long been discussed in the IT and scientific realms, but came into sharper focus in recent years with the rapid rise of generative AI and large-language models (LLMs). It reportedly was a source of friction within OpenAI during a tumultuous period in late November 2023 that saw Altman fired – and then quickly brought back aboard – as CEO.

OpenAI also continues to try to raise the billions needed to eventually reach AGI, reportedly encouraging Microsoft to invest more in the company. There also were reports last month that Altman was seeking trillions of dollars from investors to ramp up manufacturing capabilities for the GPUs necessary to power the company’s AGI ambitions.

AI a Tough Go for Nonprofits

Gal Ringel, co-founder and CEO at data privacy management firm Mine, declined to comment on the merits of the case, but said it is “evidence that nonprofits developing AI are going to have an incredibly difficult time staying afloat, which lends itself to for-profit corporations leading the charge on AI development.”

Tech culture is rife with divisiveness that gets translated into “creative conflict” or “competing visions,” which can help lead to better products or outcomes than an unchallenged strategy, said John Gallagher, vice president of Viakoo Labs. However, “this does not appear to have happened with OpenAI and Musk,” he said.

“The impact on future development of AI overall is minimal; many factors will impact the pace of development and this dispute will be (if anything) a speed bump rather than a detour or a closing off of a path,” Gallagher said. “Where the impact could be felt is in recruiting talent. The more this ends up as having a ‘good side’ and a ‘bad side’ to the dispute, the ‘good side’ (OpenAI) will harvest more and better talent.”