Musk vs OpenAI: Behind ongoing feud between the world’s richest man and company he co-founded with Sam Altman

Musk sued OpenAI last year, saying Altman violated Open AI’s original agreement which said the company would prioritise public good over profit. Altman has argued, however, that OpenAI needed to go private to raise money for further growth.

A leadership tussle

OpenAI is a non-profit AI research lab with a for-profit subsidiary. It was co-founded by Musk and Altman in 2015 with a $1 billion backing, of which Musk had pledged to provide the lion’s share. The two men “wanted to ensure Google, which had a huge lead in developing the technology, did not end up deciding what it would mean for the human race,” according to a report by The Wall Street Journal.

However, by 2017, cracks began to appear in the bond between Musk and Altman. OpenAI researchers realised that they would require much more money than a non-profit could raise to develop advanced AI. The management proposed exploring ways to transition into a for-profit company, but could not agree on how to structure it.

Zoë Schiffer, a journalist with WIRED magazine, in the podcast Uncanny Valley, said, “So he [Musk] has a solution to this problem [raising funds], and most Elon Musk solutions, it casts him in the role of Saviour. He goes to Sam [Altman] and he says, “Hey, what if I actually take over OpenAI and I run it?””

According to the emails between Musk and Altman, which were later made public, Musk at one point even acknowledged that OpenAI needed to be a for-profit entity, and thus be acquired by Tesla, a company he owns.

Altman, however, rejected Musk’s proposal. He got another OpenAI co-founder Greg Brockman, as well as chief scientist Ilya Sutskever to back him, eventually paving the way for Musk’s exit in early 2018. Altman subsequently took over the company.

In March 2019, OpenAI launched a for-profit entity, which allowed the company to raise money. In the following months, Microsoft emerged as its biggest backer and invested a billion dollars. Then, on November 30, 2022, OpenAI introduced ChatGPT, arguably one of the most successful and transformative consumer-technology products of the century.

Feud goes public

With the launch and success of ChatGPT, the Musk-Altman feud, which had been brewing in the background for years, started to become more public. For instance, a month after ChatGPT’s release, Musk cut OpenAI’s access to X. “OpenAI had access to the firehose of data from Twitter so it could feed into its large language models. Elon Musk cuts that access,” Schiffer said on the podcast.

Musk also began to take potshots at OpenAI, saying he had started the company as an open-source non-profit but it was now doing something else. Schiffer said. “He [Musk] starts to hint publicly that he does not think this transformation of OpenAI from nonprofit to having a for-profit arm is above board. He hints that it might be, in his view, illegal.”

The billionaire entrepreneur criticised the company for moving too fast and not taking safety seriously as well. He subsequently signed an open letter calling for a six-month pause on AI development.

But in 2023, Musk launched his own for-profit, open-source AI company, xAI, although this company has thus far failed to challenge OpenAI’s market and technology dominance. “Musk hoped he would become a serious rival to Altman, but did not even become a nuisance,” The WSJ reported.

In February 2024, Musk sued OpenAI and Altman, accusing the latter of abandoning the startup’s original mission of developing AI for the benefit of humanity. However, months later he abruptly withdrew the lawsuit without explanation. In August, the billionaire refiled the suit and amended it in November.

While Musk’s lawyers argued that OpenAI’s “perfidy and deceit are of Shakespearean proportions”, Altman said Musk was bitter he left before the company succeeded.

A new twist in rivalry

The feud intensified after the re-election of President Donald Trump. Altman, who once said Trump’s principles represented an “unacceptable threat to America”, worryingly observed the growing bonhomie between the President and Musk before and after the election.

But that did not stop him from trying to gain influence with the new administration. OpenAI, for instance, agreed to take over a Texas data centre project on which Oracle — a company owned by long-time Trump ally Larry Ellison — was working on but had to stop after Musk’s xAI decided to pull out.

Altman’s efforts eventually paid off. According to The WSJ, “four days before the inauguration, Ellison helped broker a call between Altman and Trump to discuss” the Stargate project.

Musk got to know about the project only after it was publicly announced on January 21, and called it “fake” on X. Soon, he proposed to buy OpenAI for $97 billion — an offer Altman rejected on X. He wrote: “No thank you but we will buy twitter for $9.74 billion if you want.” Musk had bought Twitter (now X) for $44 billion.

What the feud means

In his lawsuits against OpenAI and his offer to buy the company, Musk has repeatedly highlighted that he wants to save OpenAI from the dangerous direction in which Atlman has taken it. “It is time for OpenAI to return to the open-source, safety-focused force for good it once was,” he said. “We will make sure that happens.”

However, Musk’s warnings seem to come from competition, and a quest for control rather than concern about AI’s rapid development and its potential risks to humanity. The billionaire has rarely targeted other AI models such as Google’s Mariner, Jasper and Microsoft’s CoPilot (which is powered by GPT-4).

“The real issue here is the founder’s perspective — a personal stake in the direction and outcomes of a business. As a co-founder of OpenAI, Musk appears to care more about the company he started… versus other AI entities with which he has no direct affiliation,” according to a report in Forbes.

Like Musk, Altman also has a taste for power. Note that after his brief ouster from OpenAI in November 2023, not only was Altman reinstated but also the people who tried to oust him immediately left the board. Altman then stacked the board with a bunch of his friends, and remains OpenAI’s CEO.