OpenAI Accuses Elon Musk of Anticompetitive Conduct, Urges State Investigation

OpenAI has formally asked the attorneys general of California and Delaware to investigate Elon Musk and his affiliated entities for alleged anticompetitive conduct, marking a significant escalation in an already high-profile legal dispute between the AI company and one of its co-founders.

A Legal Battle Over OpenAI’s Direction

The conflict centers on OpenAI’s transition from its original nonprofit structure to a capped-profit model and broader corporate restructuring. Musk, who co-founded OpenAI in 2015 but departed in 2018, filed suit in 2024 against the company and CEO Sam Altman. He alleges that OpenAI abandoned its founding mission by prioritizing commercial interests over its original commitment to develop artificial general intelligence (AGI) for the benefit of humanity.

OpenAI, in turn, argues that Musk’s legal actions—and related efforts—are designed to obstruct the company’s operations and strategic evolution. In letters reportedly sent to state authorities, OpenAI claims Musk has engaged in behavior that could harm competition, including pursuing litigation that it says threatens the organization’s financial stability and long-term mission.

$100 Billion Claim and Structural Risks

According to court filings cited by the company, Musk’s lawsuit includes demands exceeding $100 billion in damages tied to OpenAI’s nonprofit foundation. OpenAI executives argue that such a financial penalty, if successful, could severely impair or even paralyze the organization.

The company also contends that Musk attempted to involve other major technology figures in potential acquisition efforts related to OpenAI, though those efforts did not materialize. These claims form part of OpenAI’s broader argument that Musk’s actions are not merely contractual disagreements but represent attempts to interfere with a direct competitor.

Competition in the AI Era

Since leaving OpenAI, Musk has founded xAI, an artificial intelligence company behind the Grok chatbot, positioning it as a direct competitor to OpenAI’s models. The competitive overlap adds a layer of complexity to the dispute, as regulators may need to assess whether the litigation strategy intersects with market competition concerns.

OpenAI maintains that Musk’s actions undermine its efforts to safely develop AGI and secure the capital required to do so. Musk, for his part, has framed his lawsuit as an attempt to hold OpenAI accountable to its founding principles and nonprofit commitments.

Implications for Governance and AGI Development

The case, expected to proceed in a California court with a jury trial, could have far-reaching consequences for AI governance, corporate structure, and the balance between mission-driven research and commercial scaling. As leading AI labs require vast capital investments to remain competitive, questions about fiduciary duty, nonprofit oversight, and competitive conduct are becoming increasingly central to the industry.

Beyond the personal dispute between Musk and OpenAI’s leadership, the litigation underscores a broader tension shaping the AI sector: how to reconcile rapid commercialization with public-interest mandates in the race toward advanced AI systems.

Regulatory scrutiny—if it proceeds—could set precedents not only for OpenAI and xAI but for the governance models of frontier AI labs more broadly.