OpenAI countersues Elon Musk, claims his $97.4 billion takeover offer was a sham bid

OpenAI and its CEO Sam Altman have counter-sued its co-founder turned competitor Elon Musk, accusing the billionaire of unfair and fraudulent business practices. Specifically, ChatGPT’s owners claim that Musk’s $97.375 billion offer to buy it out in February was a “sham bid” deliberately intended to impede OpenAI’s efforts to raise funding.

“Through press attacks, malicious campaigns broadcast to Musk’s more than 200 million followers on the social media platform he controls [X], a pretextual demand for corporate records, harassing legal claims, and a sham bid for OpenAI’s assets, Musk has tried every tool available to harm OpenAI,” read the lawsuit.

Filed to a California district court on Wednesday, OpenAI’s countersuit alleges that Musk’s offer to purchase the AI organisation for $97.375 billion was not genuine, and was in fact orchestrated to gain an unfair business advantage. Though Musk was one of OpenAI’s founders, he has since left and founded competitor xAI.

“Musk has engaged in these efforts to slow OpenAI’s progress and impair its ability to compete effectively in an increasingly crowded field, but also to seize and maintain for xAI an unearned edge designed to impair competition more broadly for the sole benefit of Musk’s xAI, at the expense of the public interest,” alleges OpenAI.

In support of its claims, OpenAI argues that there was no evidence of available funding to back Musk’s proposed $97.375 billion purchase price, and that there appeared to be no basis for the number he’d landed upon “other than a comedic reference to Musk’s favorite sci-fi series.” 

As such, OpenAI alleges that Musk’s actions were “intentionally… designed to disrupt [OpenAI’s] economic relationships and did in fact disrupt those relationships,” stating that its dealings with current and potential investors became “more costly and burdensome” due to Musk’s public acquisition offer. It also noted that the “threat” of a Musk takeover had OpenAI employees considering the prospect of “chaos and arbitrary employment action,” having seen his handling of Twitter (now X) after acquiring it in 2022.

“Without limitation, the bid complicated the process for undertaking any corporate reorganization, and may ultimately raise [OpenAI’s] cost of capital,” the countersuit claimed.

OpenAI is requesting damages, as well as a permanent injunction preventing Musk from further interfering with its business relationships.

“[T]he risk of future, irreparable harm is acute, in light of [Musk’s] years-long pattern of abusive conduct, involving, among other things… filing and withdrawing legal claims for purposes of harassing [OpenAI] and orchestrating a sham bid to purportedly acquire [OpenAI’s] assets,” read the filing. “Every phase of Musk’s campaign has been designed to force OpenAI to divert resources, expend money, or both.”

Elon Musk vs. OpenAI

Musk has made no secret of his objection to OpenAI’s transition from a non-profit into a for-profit company, or its decision not to release its artificial general intelligence as open source. The billionaire initially sued OpenAI last March, claiming that the changes amounted to a breach of contract, and attempting to force the organisation back into a non-profit model. According to Musk, there had been a “Founding Agreement” that OpenAI’s technology would be open source “for the benefit of humanity.”

In response, OpenAI alleged that no such founding agreement existed, producing emails which appeared to demonstrate that Musk was aware of its plans to become a for-profit organisation. Musk had reportedly even attempted to take ownership of OpenAI himself, offering to solve their funding issues in exchange for complete control. (They declined, and in 2018 Musk left the organisation.) The billionaire subsequently dropped his lawsuit without explanation in June, just one day before a judge was set to hear OpenAI’s request for dismissal. 

Musk’s beef wasn’t over though, and in August he filed a new lawsuit his lawyer called “much more forceful.” This time Musk claimed he was “manipulated” into co-founding OpenAI, though his arguments were otherwise rather similar to those in his previously dropped suit.

“Elon’s nonstop actions against us are just bad-faith tactics to slow down OpenAI and seize control of the leading AI innovations for his personal benefit,” OpenAI’s official X account posted on Wednesday. “Elon’s never been about the mission. He’s always had his own agenda. He tried to seize control of OpenAI and merge it with Tesla as a for-profit — his own emails prove it. When he didn’t get his way, he stormed off.”

Though OpenAI did state that Musk is “undoubtedly one of the greatest entrepreneurs of our time,” it also called his behaviour “just history on repeat — Elon being all about Elon.”

Musk’s response has been to resort to name-calling, posting, “Scam Altman is at it again.”

OpenAI didn’t specify exactly which fictional series it suspected Musk was referencing with his $97.375 billion acquisition offer. However, it wouldn’t be the first time Musk appeared to make business decisions based on joke numbers. The X owner previously fell afoul of the U.S. Securities and Exchange Commission (SEC) in 2018 when he posted that he was “considering taking Tesla private at $420” and had “funding secured.” This number is popularly associated with marijuana use, though Musk later claimed his post wasn’t a joke when called to testify about it in court. Tesla currently remains a publicly traded company.

It also wouldn’t be the first time Musk has made an acquisition offer of questionable authenticity. In 2022 the billionaire infamously offered to purchase Twitter for significantly more than its value at the time. Musk then attempted to back out of the pretty awful business deal after Twitter accepted, but was eventually forced to go through with it after Twitter sued. The company’s value subsequently plummeted under his leadership, falling by nearly 80 percent in just two years.