Elon Musk, along with his AI company xAI and former OpenAI board member Shivon Zilis, has filed a motion for a preliminary injunction against OpenAI. The filing seeks to prevent OpenAI from transitioning into a fully for-profit entity and alleges that the company is pressuring its investors to avoid funding competitors like xAI.
The lawsuit highlights growing tensions in the AI sector, raising questions about fair competition, corporate governance, and the ethical balance between profit and innovation in artificial intelligence, according to CNBC.
The latest court filings mark a significant escalation in the legal battle involving Elon Musk, OpenAI, its CEO Sam Altman, and key backers such as Reid Hoffman and Microsoft.
Musk initially filed a lawsuit against OpenAI in March 2024 in a San Francisco state court but later withdrew it, opting to refile in federal court.
In the federal case, Musk’s attorneys, led by Marc Toberoff, allege that OpenAI has engaged in practices violating federal racketeering laws.
This intensifies the dispute, highlighting concerns over the governance and competitive practices of one of the most prominent AI companies.
In mid-November, Elon Musk and his legal team expanded their federal complaint to include allegations that Microsoft and OpenAI violated antitrust laws. The claims center on accusations that OpenAI pressured investors to agree not to fund rival companies, including Musk’s AI startup, xAI.
Microsoft declined to comment.
In their motion for preliminary injunction, attorneys for Musk argue that OpenAI should be prohibited from “benefitting from wrongfully obtained competitively sensitive information or coordination via the Microsoft-OpenAI board interlocks.”
“Elon’s fourth attempt, which again recycles the same baseless complaints, continues to be utterly without merit,” an OpenAI spokesperson said in a statement.
OpenAI has grown into one of the most influential startups, with its ChatGPT chatbot fueling widespread corporate interest in AI and large language models.
Meanwhile, Elon Musk’s xAI, launched in July 2023, has quickly gained traction.
The company released its Grok chatbot and is reportedly raising up to $6 billion at a $50 billion valuation, partially to fund the purchase of 100,000 Nvidia chips.
“Microsoft and OpenAI now seek to cement this dominance by cutting off competitors’ access to investment capital (a group boycott), while continuing to benefit from years’ worth of shared competitively sensitive information during generative AI’s formative years,” the lawyers wrote in the filing.
The attorneys wrote that the terms OpenAI asked investors to agree to amounted to a “group boycott” that “blocks xAI’s access to essential investment capital.”
The lawyers later added that OpenAI “cannot lumber about the marketplace as a Frankenstein, stitched together from whichever corporate forms serve the pecuniary interests of Microsoft.”
At the start of the year, FTC Chair Lina Khan announced that the agency would launch a “market inquiry into the investments and partnerships being formed between AI developers and major cloud service providers.”
The FTC identified several major companies as part of its AI industry review, including OpenAI, Amazon, Alphabet, Microsoft, and Anthropic.
