Elon Musk withdraws lawsuit against OpenAI, faces insider trading allegations

Elon Musk has dismissed his breach of contract lawsuit against OpenAI and CEO Sam Altman. 

The lawsuit, filed in February 2023, accused OpenAI of abandoning its founding mission to develop AI for the benefit of humanity rather than for profit. 

It claimed that “OpenAI, Inc. has been transformed into a closed-source de facto subsidiary of the largest technology company in the world: Microsoft. Under its new board, it is not just developing but is actually refining an AGI to maximize profits for Microsoft, rather than for the benefit of humanity.”

Musk’s attorneys didn’t provide a reason for dropping the case, which was set to be heard by a San Francisco Superior Court judge on Wednesday.

The legal battle between Musk and the company he co-founded in 2015 has been ongoing for months. Musk claimed that OpenAI had deviated from its altruistic goals and drifted far away from its founding principles. 

It’s doubtful that the lawsuit ever had legs. Musk’s feud with OpenAI and  Altman has heated up over the years, and the lawsuit, while probably fair in its sentiment, looked more like a novelty than a genuine legal challenge. 

OpenAI countered that Musk had previously supported the idea of a for-profit structure and even suggested a merger with Tesla. 

The more personal feud between Musk and virtually all the other Big Tech generative AI protagonists intensified earlier this week when Apple announced a partnership to enhance its Siri voice assistant and operating systems with ChatGPT.

Commenting on the Apple–OpenAI partnership, Musk blasted both OpenAI and Apple on X, stating, “Apple has no clue what’s actually going on once they hand your data over to OpenAI. They’re selling you down the river.” 

It’s patently absurd that Apple isn’t smart enough to make their own AI, yet is somehow capable of ensuring that OpenAI will protect your security & privacy!

Apple has no clue what’s actually going on once they hand your data over to OpenAI. They’re selling you down the river.

— Elon Musk (@elonmusk) June 10, 2024

Despite Musk’s concerns about Apple teaming up with OpenAI, investors reacted favorably, as Apple’s stock market value surged above $3 trillion, reaching a record high.

Why Musk withdrew his OpenAI lawsuit

This might have just been one lawsuit too many for Musk.

Earlier in the week, it was revealed that Musk is facing a separate lawsuit in Delaware brought by the Employees’ Retirement System of Rhode Island (ERSRI), an institutional investor in Tesla.

The lawsuit claims that Musk and his brother Kimbal, a Tesla director, improperly sold a combined $30 billion in shares between late 2021 and the end of 2022, allegedly cashing in ahead of developments that would have caused the stock to fall in value.

The ERSRI lawsuit further alleges that Musk sold the shares at artificially inflated prices by concealing his plan to use the proceeds to buy Twitter.

It also claims that Musk sold Tesla stock when he knew delivery schedules had fallen behind and raises concerns about poor governance, such as diverting Tesla employees to work at X and forcing Tesla to start paying for advertising on X.

And wait, there’s more. Tesla shareholder Michael Perry filed another action last month, claiming Musk engaged in insider trading. 

There are only so many lawsuits one tech boss can handle.

Even so, OpenAI‘s leadership remains under pressure. After last year’s leadership tussle, OpenAI CEO Sam Altman hasn’t left the spotlight.

Altman has since been criticized by OpenAI insiders and scrapped a controversial clause in employee contracts forbidding them from speaking ill of the company. 

Employees from OpenAI and Google later banded together to put forward their ‘right to warn’ if they encounter AI-related risks in their companies. 

The OpenAI lawsuit is dismissed, but the sentiment remains. Musk and his lawyers, meanwhile, are busy with more serious matters.

The post Elon Musk withdraws lawsuit against OpenAI, faces insider trading allegations appeared first on DailyAI.