Federal antitrust regulators on Friday added weight to some of Elon Musk's lawsuits seeking to prevent OpenAI from restructuring itself as a fully for-profit company.
In the note Filed in federal court in California. Lawyers for the Federal Trade Commission and the Justice Department's antitrust division have not offered direct support to Musk. claim OpenAI and Microsoft collude in Anti-competitive “de facto mergers” But they called the court skeptical about one of the defenses made by OpenAI's legal team.
OpenAI started as a non-profit organization. It was partially funded by Musk and then transformed itself into a for-profit company controlled by a not-for-profit board of directors. It is Currently planning To separate completely from the non-profit board and become a public benefit corporation. This makes it possible to be fully responsible to investors. Instead of adhering to a charitable mission
A key contributor to OpenAI's growth and pressure to become a profitable business is the more than $13 billion in investment and other support it received from Microsoft, a publicly traded company competing in the AI market. Reid Hoffman The founder of LinkedIn is a member of Microsoft's board of directors and a member of OpenAI's board of directors until March 2023. Microsoft CEO Dee Templeton was a non-voting member of OpenAI's board of directors from November 2023 to July. 2024
Musk argued that Microsoft representatives' positions on the OpenAI board violated federal antitrust laws that prohibit anyone from serving on the supervisory boards of competing companies. Known as a harmonizing committee, OpenAI responded by saying the argument was questionable. Both Hoffman and Templeton are no longer members of OpenAI's board.
However, attorneys for the FTC and DOJ wrote that “connected board terminations, such as having an individual resign from a company's board of directors, That alone is not sufficient to assert a claim under Section 8 of the Clayton Act.” Courts should avoid assuming otherwise.”
The federal agency has not weighed in on Musk's other allegations, including that OpenAI CEO Sam Altman misled him and conspired with Microsoft to persuade investors not to fund Musk's AI startup, xAI.
Although such cases often involve feuds between billionaires in dramas, But the FTC and DOJ filings are another sign that regulators are keeping a close eye on OpenAI's transformation plans. The Delaware attorney general filed an amicus brief in the case and Said she would take action If you believe that OpenAI is violating the law and Meta asked. California Attorney General's Office Blocks OpenAI's Restructuring