Legal feud intensifies as Elon Musk names Microsoft as a defendant in OpenAI lawsuit

Elon Musk has broadened his legal battle against OpenAI by naming Microsoft as a co-defendant in an amended lawsuit. The lawsuit alleges that Microsoft's partnership with OpenAI constitutes a "de facto merger" and accuses both companies of engaging in anticompetitive practices to dominate the artificial intelligence market.

The revised complaint, filed in a federal court in Northern California, also includes Reid Hoffman, a Microsoft board member and former OpenAI board member, as a defendant. Musk's AI venture, xAI, and Shivon Zilis, a former OpenAI board member and Neuralink executive, have been added as plaintiffs. Zilis, who is also the mother of three of Musk's children, is cited for her connections to both Neuralink and OpenAI.

The lawsuit claims that OpenAI and Microsoft hold nearly 70% of the generative AI market, accusing them of monopolistic practices. It also highlights OpenAI's aggressive recruitment tactics, offering substantial compensation packages to starve competitors of AI talent. Reports suggest some OpenAI employees earn up to $800,000 annually, including bonuses and stock options.

Musk’s legal team argues that Microsoft's deep integration with OpenAI, including joint workspaces and personnel overlap, solidifies the companies as a single entity. A report by The New York Times noted that some Microsoft AI executives operate out of OpenAI’s San Francisco offices, reinforcing claims of their closely intertwined operations.

This lawsuit escalates a longstanding rivalry between Musk and OpenAI CEO Sam Altman. Musk, who co-founded OpenAI in 2015, previously criticized the company for deviating from its nonprofit mission by prioritizing commercial interests. He alleges OpenAI misled him during its early stages, particularly regarding its partnership with Microsoft, which has invested over $13 billion in the organization.