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Elon Musk’s attempt to prevent OpenAI from moving to a for-profit model has been denied after a federal judge ruled against the attempted injunction.
Prior to his recent attempts to buy out OpenAI, Musk, his attorneys, his own AI company, xAI, and former OpenAI board member Shivon Zilis filed for a preliminary injunction against its move towards a for-profit structure.
Musk claims that “OpenAI is evil” and called its for-profit restructure a “total scam”.
Despite the case being escalated to the Federal Court, the judge has denied the injunction, saying that Musk “failed to meet their burden of proof for the extraordinary relief requested”.
However, other elements of the lawsuit were allowed to proceed.
Late last year, OpenAI announced a corporate restructure that would shift the company away from its non-profit structure to be for-profit.
Musk, who is a co-founder and formerly part of OpenAI, attempted to purchase the company for US$97.4 billion with a consortium of investment and venture capital firms, claiming that the move to a for-profit model would threaten the safe development of AI.
“If Sam Altman and the present OpenAI, Inc board of directors are intent on becoming a fully for-profit corporation, it is vital that the charity be fairly compensated for what its leadership is taking away from it: control over the most transformative technology of our time,” Marc Toberoff, the consortium’s attorney, said in a widely reported statement.
“As the co-founder of OpenAI and the most innovative and successful tech industry leader in history, Musk is the person best positioned to protect and grow OpenAI’s technology.”
However, the buyout offer was refused by co-founder and CEO of OpenAI Sam Altman and the company board.
“No thank you but we will buy twitter for US$9.74 billion if you want,” Altman said.
Additionally, the OpenAI board said that as part of its for-profit restructure, it would develop a public benefit corporation, which is a for-profit that aims to promote social responsibility, which, in this case, would be for the safe and regulated development of AI.
“The hundreds of billions of dollars that major companies are now investing into AI development show what it will really take for OpenAI to continue pursuing the mission,” said OpenAI’s board at the time.
The board also said the funds needed to continue pursuing the development of AI would not be reached through a non-profit model.
“It became increasingly clear that donations alone would not scale with the cost of computational power and talent required to push core research forward, jeopardising our mission,” said OpenAI, which had only raised US$130.5 million in donations through its for-profit subsidiary since it was introduced in 2019.
It is also worth noting that Musk’s xAI is also a for-profit, public-benefit corporation.
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