OpenAI Claps Back at Elon Musk: The Untold Story of Its For-Profit Plans
In a dramatic turn of events, OpenAI has taken to its blog to address claims made by Elon Musk, one of its co-founders, regarding the company’s shift to a for-profit structure. In a blog post titled “Elon Musk Wanted an OpenAI For-Profit,” the company shared detailed screenshots of emails and text conversations from 2017 that show Musk’s push for OpenAI to adopt a for-profit model long before the company made the decision to do so.
This new revelation adds fuel to the ongoing legal battle between Musk and OpenAI, particularly after Musk’s xAI company started to compete with OpenAI’s ChatGPT and other AI innovations. Let’s break down the history and the legal drama behind this clash.
Musk’s Push for a For-Profit OpenAI Back in 2017
From the Start, Musk Wanted OpenAI to Be a For-Profit
OpenAI, founded in 2015 as a non-profit organization, made a shift in 2019 when it converted to a “capped-profit” model. But according to OpenAI’s recent blog post, this transformation was not a sudden move. In fact, Elon Musk had been advocating for a for-profit OpenAI since 2017, even going as far as creating a for-profit entity called “Open Artificial Intelligence Technologies, Inc.” Musk’s push for a for-profit structure was clear, as was his desire for majority equity and full control of the company.
OpenAI’s blog post highlights a key moment when Musk, dissatisfied with the lack of control, “walked away” from the project. According to OpenAI’s account, Musk predicted the company would fail without his vision and leadership.
Key Conversations and Emails Revealed
Emails and Texts Show Musk’s True Intentions
The screenshots shared by OpenAI reveal emails and text messages that show Musk questioning OpenAI’s non-profit model from the very beginning. For instance, in November 2015, Musk emailed OpenAI’s CEO Sam Altman, expressing doubts about the non-profit structure and suggesting that a standard C-corp with a parallel nonprofit might be a better fit.
Further conversations from 2017 show Musk proposing a new for-profit model for OpenAI, with control and leadership clearly in his hands. According to OpenAI, these talks fell apart due to disagreements about equity, control, and who should be CEO.
The Breakdown of Musk’s For-Profit Vision
The Push for Full Control and Equity
Musk’s desire for control and equity became a key sticking point during these early discussions. He even proposed that he should have “unequivocally” initial control over OpenAI. However, his offer was rejected by the board, leading to a public breakup between Musk and OpenAI in 2018.
In fact, Musk was so determined to make OpenAI a part of Tesla that he suggested spinning off OpenAI into Tesla. He believed that only Tesla’s AI and a major expansion of OpenAI’s efforts could lead to success. When his vision wasn’t accepted, Musk ultimately resigned as co-chair of OpenAI in February 2018.
OpenAI’s Journey: From Non-Profit to Capped-Profit
The Shift in Structure
Although Musk’s vision didn’t come to fruition, OpenAI’s eventual shift toward a capped-profit model allowed it to grow exponentially, especially after the launch of ChatGPT in November 2022. This new model allowed OpenAI to raise billions in funding, including significant investment from Microsoft.
According to Sam Altman, OpenAI’s CEO, the capped-profit model was partially influenced by Musk’s withdrawal of funding and the increasing need for capital to fund its growing AI ambitions.
A Growing Rivalry with xAI
Musk’s departure didn’t end the conflict between him and OpenAI. In July 2023, Musk launched xAI, an AI company that competes directly with OpenAI. With xAI’s debut, Musk made it clear that his ambition to create advanced AI technologies didn’t stop with OpenAI. This new legal battle is largely about control, the funding of AI, and the direction of the rapidly growing AI industry.
OpenAI’s ChatGPT has become a household name, while Musk’s xAI released its Grok chatbot, and both companies are raising billions to fund their efforts. The stakes are high as the generative AI market continues to skyrocket.
The Legal Drama Unfolds: Musk vs. OpenAI
Musk’s Lawsuits Against OpenAI
Musk’s legal battles with OpenAI have intensified in recent months. In November 2023, Musk filed for a preliminary injunction against OpenAI, arguing that the company had violated laws regarding competitively sensitive information shared with Microsoft. He claims that Microsoft’s influence over OpenAI has created an unfair advantage for them, especially as OpenAI moves toward becoming a fully for-profit entity.
Musk’s legal team also claims that OpenAI’s board and investors have been trying to stifle competition in the AI space by using their control over the AI market to limit investments in rival companies, including xAI. This escalating antitrust case involves claims of racketeering and anti-competitive practices by OpenAI and its backers.
A Complex History of Control and Funding
The battle between Musk and OpenAI highlights the complexities of control, funding, and direction in the rapidly changing world of AI. OpenAI’s original mission to develop artificial general intelligence (AGI) for the benefit of humanity has faced numerous challenges, including financial pressures, the need for investment, and the quest for dominance in the AI space.
OpenAI Today: The Road to Full For-Profit
The Future of OpenAI
Today, OpenAI is on the verge of becoming a fully for-profit entity, with plans to transition into a public benefit corporation. This restructuring is aimed at making OpenAI more attractive to investors while maintaining its original nonprofit roots as a separate entity.
The company has become one of the most valuable startups in the world, with a valuation of $157 billion. However, OpenAI’s shift toward a for-profit model is creating new challenges, including competition from Musk’s xAI, Anthropic, and even tech giants like Google, Meta, and Amazon.
Conclusion: The Battle for AI Dominance
Elon Musk’s vision for OpenAI has always been intertwined with his ambition for AI dominance. While his early attempts to control OpenAI’s future were rejected, his involvement in the AI space continues to evolve. Whether through xAI or his ongoing legal battles, Musk remains a key player in shaping the future of artificial intelligence.
As OpenAI moves toward full profit status, the clash between Musk’s vision and OpenAI’s mission will likely continue to make headlines. One thing is clear: the AI race is heating up, and the stakes have never been higher.
I am Aparna Sahu
Investment Specialist and Financial Writer
With 2 years of experience in the financial sector, Aparna brings a wealth of knowledge and insight to Investor Welcome. As an accomplished author and investment specialist, Aparna has a passion for demystifying complex financial concepts and empowering investors with actionable strategies. She has been featured in relevant publications, if any, and is dedicated to providing clear, evidence-based analysis that helps clients make informed investment decisions. Aparna holds a relevant degree or certification and is committed to staying ahead of market trends to deliver the most up-to-date advice.