FTC and DOJ Weigh In on Elon Musk's Lawsuit Against OpenAI, Potentially Bolstering Key Arguments

Support Grows for Elon Musk's OpenAI Lawsuit Ahead of Court Hearing

Antitrust authorities have also submitted legal analyses in the case. On Tuesday, Jan. 14, an Oakland court will stage the opening scene in a high-stakes legal drama that pits Elon Musk against OpenAI and its founders. Ahead of Tuesday's hearing, Musk's lawsuit has received support from a key think tank and industry figures, including the "Godfather of AI" Geoffrey Hinton. Meanwhile, the Federal Trade Commission and Department of Justice have provided legal analysis that could buttress one of its central arguments. For Musk, the issue is personal. Having co-founded OpenAI with Altman and Greg Brokman in 2015, he provided the lion's share of the organization's initial funding but left in 2018 citing potential conflicts of interest. Musk's complaint centers on OpenAI's transformation since then, including its partnership with Microsoft and the transition to a for-profit company. These changes, the lawsuit argues, violate agreements Altman and Brokman allegedly entered into when they started the venture. Considering the commercial interests at stake and Musk and Altman's escalating rivalry, personal grievances may well motivate the litigation. But briefs submitted to the court in recent weeks highlight more widespread concerns with OpenAI's business practices. An Amicus Brief composed by the campaign group Encode argues that OpenAI's for-profit restructuring would undermine its commitment to public safety, which it said risked becoming secondary to the commercial interests of shareholders. AI Pioneer Backs Musk's Lawsuit Encode's brief mirrors a key pillar of Musk's argument -- that OpenAI gained an important advantage from its non-profit status -- one that could be considered unfair if it now becomes a normal commercial enterprise. Adding gravitas, the filing was accompanied by comments from Geoffrey Hinton, who is responsible for some of the most important innovations in the history of machine learning. "OpenAI was founded as an explicitly safety-focused non-profit and made a variety of safety-related promises in its charter," Hinton observed . "It received numerous tax and other benefits from its non-profit status. Allowing it to tear all of that up when it becomes inconvenient sends a very bad message to other actors in the ecosystem," Hinton added. Antitrust Regulators Weigh in In addition to Encode's Amicus Brief, the FTC and the DOJ have also provided input ahead of the opening hearing in Musk vs. OpenAI. The regulators' analysis, which Reuters reported on Friday, Jan. 10, pointed out legal doctrines that support Musk's claim that OpenAI and Microsoft engaged in anticompetitive practices. Musk's lawyer Marc Toberoff said the participation of the FTC and DOJ "is a sign of how seriously regulators take OpenAI and Microsoft's misconduct." OpenAI's partnership with Microsoft is currently being scrutinized by a wide-ranging FTC antitrust probe that is looking into the Big Tech firm's licensing and investment practices. In Musk's lawsuit, unfair competition is listed as one of five charges levied against OpenAI, but the deal with Microsoft forms just one part of the allegation. "From an investment perspective, competing against an entity employing the new OpenAI business model would be like playing a game of basketball where the other team's baskets are worth twice as many points," the filing states. "If this Court validates OpenAI's conduct here, any start-up seeking to remain competitive in Silicon Valley would essentially be required to follow this OpenAI playbook, which would become standard operating procedure for start-ups to the detriment of legitimate non-profits."

Musk Gains Antitrust Watchdog Support in OpenAI Battle | PYMNTS.com

Elon Musk has reportedly gained government support in his legal battle against OpenAI. While not offering an opinion in the case, the Federal Trade Commission (FTC) and Department of Justice (DOJ) pointed to legal doctrines supporting Musk's argument that OpenAI and partner/patron Microsoft engaged in anticompetitive behavior, Reuters reported Friday (Jan. 10). Musk, one of OpenAI's co-founders, is suing to prevent the startup's switch to a public company, and also maintains that OpenAI and Microsoft -- also a defendant -- colluded to hinder competition in the artificial intelligence (AI) space. Musk heads the AI firm xAI. An OpenAI spokesperson pointed Reuters to the argument the company has made before: that Musk's suit is without evidence and is essentially harassment. Marc Toberoff, Musk's attorney, said, "the participation of the DOJ and FTC is a sign of how seriously regulators take OpenAI and Microsoft's misconduct." The FTC has been examining AI partnerships, including the one between OpenAI and Microsoft, while also probing anticompetitive conduct by Microsoft and investigating whether OpenAI violated consumer protection laws. Musk alleges OpenAI breached antitrust law by forcing investors to agree not to invest in rival AI companies, and by sharing board members with Microsoft. OpenAI contends the board member claims are moot, as Microsoft board member Reid Hoffman, who was on OpenAI's board, and Microsoft executive Deannah Templeton, who had an observer seat, are no longer connected with it. All the same, those directors could still have sensitive competitive information, the FTC and DOJ argued in the recent court filing, saying that board members who only have observer status are not exempt from the law. Another of Musk's claims is that OpenAI fomented a group investor boycott against its rivals. These claims hold water even when the organizer of the boycott is not a member, the FTC and DOJ argued. In other AI news, PYMNTS took a closer look at the sector last week in the wake of Anthropic's targeted $60 billion valuation. "From automating routine tasks to enhancing decision-making through predictive analytics, the demand for enterprise AI solutions is skyrocketing," that report said. "However, corporate buyers are discerning, prioritizing factors such as integration capabilities, data security, and the ability to customize models to fit their unique needs. These priorities are shaping the AI market." At a time when tech stacks are becoming more complex, seamless integration is a key priority for enterprise buyers, that report added. Research by PYMNTS Intelligence has shown that 75% of CFOs plan to increase their AI investment.

Musk's Lawsuit Against OpenAI Gets a Boost From Lina Khan's FTC

While they didn't support Musk's allegations directly, the feds added weight to his interpretation of antitrust law. Federal antitrust regulators on Friday added weight to portions of Elon Musk's lawsuit seeking to prevent OpenAI from restructuring itself into a fully for-profit company. In a brief filed with a federal court in California, attorneys for the Federal Trade Commission and the Department of Justice's antitrust division did not directly support Musk's claims that OpenAI and Microsoft have colluded in an anticompetitive "de-facto merger," but they did urge the court to be skeptical about one of the defenses made by OpenAI's legal team. OpenAI began as a non-profit, funded in part by Musk, and then converted itself into a for-profit company controlled by a non-profit board of directors. It is now planning to completely separate from that non-profit board and become a public benefit corporation, allowing it to be fiduciarily responsible to investors rather than beholden to a charitable mission. A key contributor to OpenAI's growth and the pressure for it to become a profitable business has been the more than $13 billion in investments and other support it's received from Microsoft, a publicly traded company that competes in the AI market. Reid Hoffman, the founder of LinkedIn, is a member of Microsoft's board and was a member of OpenAI's board until March 2023. A top Microsoft executive, Dee Templeton, was a non-voting member of OpenAI's board from November 2023 until July 2024. Musk has argued that the Microsoft representatives' positions on the OpenAI board violated federal antitrust laws that prohibit someone from serving on the governing board of competing companies, which is known as an interlocking directorate. OpenAI has responded by saying the argument is moot because neither Hoffman nor Templeton are members of OpenAI's board anymore. The FTC and DOJ lawyers, however, wrote that "ending an interlocking directorate, e.g., by having a person resign from a corporate board, is not sufficient, on its own, to moot a claim under Section 8 of the Clayton Act. ... In resolving this matter, the Court should avoid holding otherwise." The federal agencies did not weigh in on Musk's many other allegations, including that OpenAI CEO Sam Altman misled him and conspired with Microsoft to convince investors not to fund Musk's own AI startup, xAI. While the lawsuit has often taken the tone of a soap opera feud between billionaires, the FTC and DOJ filing is another sign that regulators have a close eye on OpenAI's transition plans. Delaware's attorney general has filed a brief in the case and said she will take action if she believes OpenAI is violating the law and Meta has asked the California attorney general's office to block OpenAI's restructuring.

Exclusive | FTC, DOJ backs key allegations in Elon Musk's antitrust case against...

The feds have sided with Elon Musk on a key pillar of his high-profile antitrust lawsuit against Sam Altman-led OpenAI, Microsoft and billionaire Reid Hoffman, The Post has learned. In November, Musk's lawyers added Microsoft and Hoffman as defendants in an amended civil lawsuit targeting OpenAI. The lawsuit alleges that OpenAI teamed with Microsoft in an illegal effort to monopolize the AI market in violation of federal antitrust law and its own nonprofit mission. In the amended lawsuit, Musk's lawyers alleged that the simultaneous service of Hoffman and another executive, Deannah Templeton, on the boards of OpenAI and Microsoft violated Section 8 of the Clayton Act - which prohibits so-called "interlocking directorates" in which a person serves as a board director at two competing firms. In a joint statement of interest filed in California federal court on Friday, the Federal Trade Commission and Justice Department - which both have authority to enforce the Clayton Act - essentially state that Musk's lawyers are correct to argue that the board maneuverings violated the law. It's a legal windfall for Musk, who is seeking to void OpenAI's license with Microsoft, force the parties to divest what are described as "ill-gotten" gains and require OpenAI to adhere to its original mission to develop safe AI for the public good. Musk claims that he and the public suffered irreparable harm as a result of their actions and also should be entitled to financial damages. On the issue of interlocking directorates, the agencies argued that an executive's resignation from the board isn't necessarily enough to address potential violations of antitrust law under Clayton Act, according to details of the filing obtained by The Post. Officials accused of violating the law have a "heavy burden" to demonstrate that it is "absolutely clear that the allegedly wrongful behavior could not reasonably be expected to recur," the joint filing says. Any attempt to argue that an official's voluntary resignation nullifies violations of the Clayton Act would undermine the feds' ability to enforce the law, the filing adds. Additionally, the FTC and DOJ argue that titling an official as a non-voting board observer rather than a full member does not shield them or their companies from liability under the Clayton Act. The feds asked the court to avoid ruling otherwise. The Post has reached out to the DOJ and FTC for comment. Hoffman, the cofounder of LinkedIn, has served as an independent director on Microsoft's board since 2017. He is also a partner at tech venture firm Greylock. An original investor in OpenAI, Hoffman joined its board in 2018. He stepped down from the board in March 2023, citing concerns that his investments in firms partnering with OpenAI would be a conflict of interest. "To be clear, since the start, OpenAI and its board has been very careful to monitor and avoid any conflicts to date," Hoffman wrote in a LinkedIn post at the time. Microsoft did not invest in OpenAI until 2019, when it poured $1 billion into the company. It has since committed more than $13 billion. Templeton is a longtime Microsoft executive who served as a non-voting observer on OpenAI's board from "approximately November 29, 2023 until July 9, 2024, when it was widely reported she stepped down amid renewed enforcement by the FTC of the Clayton Act's prohibition on interlocking directorates," according to Musk's lawsuit. "The purpose of the prohibition on interlocking directorates is to prevent the sharing of competitively sensitive information in violation of the antitrust laws and/or providing a forum for the coordination of other anticompetitive activity," Musk's complaint alleges. "Allowing Templeton and Hoffman to serve as members of OpenAI, Inc.'s Board undermined this purpose." Representatives for Musk, Microsoft, OpenAI and Hoffman did not immediately return requests for comment. Musk co-founded OpenAI but became bitter rivals with Altman after disagreements over the firm's direction. Musk has since founded xAI, which directly competes with the ChatGPT maker. In December, Musk asked the court to block OpenAI's plans to transition to a for-profit structure. "Never before has a corporation gone from tax-exempt charity to a $157 billion for-profit, market-paralyzing gorgon -- and in just eight years," Musk's lawsuit says. For its part, OpenAI has said that Musk's claims are meritless and accused him in a past filing pursuing the suit as part of a "increasingly blusterous campaign to harass OpenAI for his own competitive advantage."

FTC weighs in on Musk's lawsuit against OpenAI

(Reuters) - The U.S. Federal Trade Commission weighed in on Friday on Elon Musk's lawsuit seeking to block OpenAI's conversion to a public company, pointing out legal doctrines that could support his claim that OpenAI and Microsoft engaged in anticompetitive practices. While it did not officially support either side, the FTC offered legal analysis that could aid Musk at a Tuesday hearing in Oakland, California. Musk co-founded OpenAI and owns AI startup xAI. A spokesperson for Microsoft declined to comment. A spokesperson for OpenAI did not immediately respond to a request for comment. The FTC is separately looking into partnerships in AI, including between Microsoft and OpenAI, investigating potentially anticompetitive conduct at Microsoft and probing whether OpenAI violated consumer protection laws. Musk alleges OpenAI violated antitrust law by making investors agree not to invest in rival artificial intelligence firms, and by sharing board members with Microsoft, which is also a defendant in the lawsuit. OpenAI has said the board member claims are moot, because Microsoft board member Reid Hoffman, who was on OpenAI's board, and Microsoft executive Deannah Templeton, who had an observer seat, are no longer affiliated with it. But even after they leave boards, directors could still have sensitive competitive information, the FTC said. Board members who only have observer status are not exempt from the law, the agency said in its brief. Musk also claims that OpenAI facilitated a group investor boycott against its rivals. Such claims are viable even when the organizer of the boycott is not a member, the FTC said. (Reporting by Jody Godoy in California; Editing by Rod Nickel)

Elon Musk calls on California and Delaware to force auction of OpenAI stake

A lawyer for Elon Musk has called on the California and Delaware attorneys-general to force OpenAI to auction off a large stake in its business, intensifying a bitter fight with the company's chief executive Sam Altman. In a letter to the states' top law officers seen by the Financial Times, Musk's attorney Marc Toberoff said he was writing on behalf of big artificial intelligence investors who wanted to participate in an open and competitive bidding process for the OpenAI stake. OpenAI had no plans for such an auction, according to a person with knowledge of the ChatGPT-maker's thinking. Musk's camp simply "want more chaos", they added. The highly unusual effort follows lawsuits launched by Musk in the past year over the attempt by OpenAI, which was founded as a non-profit dedicated to ensuring AI benefits humanity, to restructure as a for-profit company. Musk co-founded OpenAI with Altman and nine others in 2015, and was the most significant early funder before leaving the board in 2018 after clashing with Altman. OpenAI launched a for-profit subsidiary a year later in order to raise outside capital, including more than $13bn so far from its biggest backer, Microsoft. However, the non-profit entity, along with employees and investors, currently owns that for-profit subsidiary. OpenAI is attempting to become a public benefit corporation, a type of for-profit entity committed to bettering society. The company has suggested that the non-profit's "significant interest" in the existing for-profit would take the form of shares in the PBC at a fair valuation, which it says will be determined by independent financial advisers. The PBC would run and control OpenAI's operations and business, while the non-profit would "pursue charitable initiatives in sectors such as healthcare, education and science", the company wrote in a December blog post. In his letter, Musk's lawyer pushed the attorneys-general to allow outside investors to bid for the non-profit's stake in OpenAI. If successful, that could allow an outside investor to take a significant position in, and to exercise control over, the start-up. The proposed conversion to a PBC would also mean the non-profit entity will relinquish governance over OpenAI's business and operations. One person familiar with the situation said those powers could themselves be worth billions of dollars. In the letter, Toberoff suggested an auction was the only way to ensure the non-profit receives maximum value for its assets and upholds its fiduciary duties. The non-profit's stake in the public benefit corporation was likely to be worth tens of billions of dollars, according to a person with knowledge of the matter. The Tesla chief and confidant of US president-elect Donald Trump has previously accused Altman of "deceit of Shakespearean proportions", alleging that OpenAI and Microsoft have departed from the start-up's original mission. OpenAI said in December that its conversion into a PBC would "result in one of the best resourced non-profits in history" and multiply the donations given by early backers -- including Musk -- "manyfold". Its complex corporate governance came under scrutiny when Altman was briefly ousted by the non-profit board in November 2023, and the company has since been weighing more conventional arrangements. Musk, who founded his own AI start-up xAI in 2023, has recently stepped up efforts to derail OpenAI's conversion. In November, he sought to block the process with a request for a preliminary injunction filed in California. Meta has also thrown its weight behind the suit, which is the fourth Musk has launched against OpenAI. In legal filings from November, Musk's team wrote: "OpenAI and Microsoft together exploiting Musk's donations so they can build a for-profit monopoly, one now specifically targeting xAI, is just too much." Kathleen Jennings, attorney-general in Delaware -- where OpenAI is incorporated -- has since said her office was responsible for ensuring that OpenAI's conversion was in the public interest, and determining whether the transaction was at a fair price. Members of Musk's camp -- wary of Delaware authorities after a state judge rejected a proposed $56bn pay package for the Tesla boss last month -- read that as a rebuke of his efforts to block the conversion, and worry it will be rushed through. They have also argued OpenAI's PBC conversion should happen in California, where the company has its headquarters. In a legal filing last week Musk's attorneys said Delaware's handling of the matter "does not inspire confidence". OpenAI committed to become a public benefit corporation within two years as part of a $6.6bn funding round in October, which gave it a valuation of $157bn. If it fails to do so, investors would be able to claw back their money. There are a number of issues OpenAI is yet to resolve, including negotiating the value of Microsoft's investment in the PBC. A conversion was not imminent and would be likely to take months, according to the person with knowledge of the company's thinking. OpenAI declined to comment. The California and Delaware attorneys-general did not immediately respond to a request for comment.

Elon Musk Wants OpenAI to Be Forced Into Selling a Portion of Itself

Elon Musk enjoys being at the center of the universe. If generative AI is going to be as transformational as Silicon Valley believes, he cannot lose. Especially not to a company he helped start. To that end, Musk continues throwing more spaghetti at the wall in his attempt to slow down OpenAI, the company he co-founded in 2015 and that now competes against his own rival startup xAI. According to a report in the Financial Times, lawyers for Musk have contacted attorneys-general in Delaware and California to request that a large stake in the company be sold off in an open auction process. Musk has not had a good relationship with the courts in Delaware, hence the interest in moving proceedings to California where OpenAI is headquartered. The details are complicated, but essentially, OpenAI has been working towards transitioning from a non-profit into a for-profit entity. Under the new structure, a non-profit subsidiary would remain inside OpenAI that would hold a stake in the for-profit company and continue working on philanthropic initiatives in areas like healthcare and education. Musk, having put initial capital into OpenAI when it was founded as a non-profit, seems to be arguing it would be in the best interest of the non-profit entity to sell its stake and use the capital for philanthropic purposes. It would, of course, give him an opportunity to get involved in and have influence over OpenAI again. Through a series of lawsuits, Musk has made a few arguments to try and blunt OpenAI's growth, including that he was deceived into investing in the company under the impression that it would always remain a non-profit with the purpose of developing AI safely and making it available freely for anyone to use. He has for a long time now used the term "ClosedAI" to ridicule the company and allege that it has in fact kept its technology closed off to itself. Another reason he has argued in court that OpenAI should not be allowed to convert into a for-profit is because doing so would mean it was able to grow into the giant it is today without paying any taxes for years, giving it an unfair advantage over for-profit startups like his own. Musk left OpenAI's board in 2018 over disagreements about its strategy, and seemingly out of spite, founded xAI in 2023. Musk is not the most sympathetic character, particularly given his company is competing directly with OpenAI and seems to have been launched out of bitterness for being left out of OpenAI as it became the hottest startup in the world. But OpenAI is not exactly worth defending either. After receiving tens of billions of dollars in funding from Microsoft and others, launching commercial products with monthly subscriptions, and keeping much of its technology to itself rather than open-sourcing it, few have truly believed that OpenAI was honoring the intention and purpose of the non-profit model. Meta, which does actually open-source its models, and several other parties including a non-profit focused on AI safety have joined in on Musk's lawsuit. If OpenAI were forced to remain a non-profit, as Musk hopes, the company would have a hard time raising more funding needed to compete in the AI race (most investors want a clear path to realizing a return). Musk's xAI has quickly been catching up with billions of dollars raised that has been used to scale up a massive supercomputer cluster for model training, and because Musk owns X, formerly Twitter, he has been able to integrate it deeply with the social network. Musk is set to be one of the most influential people in the incoming Trump administration, where he could potentially cause the startup headaches through investigations or simply by thwarting its influence on legislation. On top of that, OpenAI is facing other headwinds. Among them, Microsoft, its biggest backer, has been distancing itself and building up its own AI models; OpenAI continues to be embroiled in legal battles with media companies including the New York Times over allegations it has participated in massive copyright infringement through its model training; and CEO Sam Altman was personally sued this week by his own sister over allegations he sexually abused her as a child.

US Supports Musk Challenge to OpenAI-Microsoft Board Overlaps

The two US antitrust agencies sided with part of Elon Musk's argument to block artificial intelligence startup OpenAI from restructuring as a for-profit company. The Justice Department and Federal Trade Commission argued in a court filing Friday that overlapping board directors can harm competition, even after the person in question resigns.

Elon Musk wants OpenAI to auction off a large ownership stake

A lawyer for Elon Musk has called on the California and Delaware attorneys-general to force OpenAI to auction off a large stake in its business, intensifying a bitter fight with the company's chief executive Sam Altman. In a letter to the states' top law officers seen by the Financial Times, Musk's attorney Marc Toberoff said he was writing on behalf of big artificial intelligence investors who wanted to participate in an open and competitive bidding process for the OpenAI stake. OpenAI had no plans for such an auction, according to a person with knowledge of the ChatGPT-maker's thinking. Musk's camp simply "want more chaos," they added. The highly unusual effort follows lawsuits launched by Musk in the past year over the attempt by OpenAI, which was founded as a non-profit dedicated to ensuring AI benefits humanity, to restructure as a for-profit company. Musk co-founded OpenAI with Altman and nine others in 2015, and was the most significant early funder before leaving the board in 2018 after clashing with Altman. OpenAI launched a for-profit subsidiary a year later in order to raise outside capital, including more than $13 billion so far from its biggest backer, Microsoft. However, the non-profit entity, along with employees and investors, currently owns that for-profit subsidiary. OpenAI is attempting to become a public benefit corporation, a type of for-profit entity committed to bettering society. The company has suggested that the non-profit's "significant interest" in the existing for-profit would take the form of shares in the PBC at a fair valuation, which it says will be determined by independent financial advisers.

Musk asks state AGs to auction off OpenAI stake in nonprofit restructuring, sources say

Elon Musk's attorney urged state law officers to establish a competitive bidding process for OpenAI's charitable assets amid the startup's efforts to remove nonprofit control. Musk is suing OpenAI over its restructuring into a for-profit entity, arguing it violates the mission. State attorneys, including Delaware's, are reviewing the proposed changes.A lawyer for billionaire Elon Musk has asked attorney generals in the states of California and Delaware to push OpenAI to auction a major stake in its business to decide fair value of its charitable asset during its corporate restructuring, sources familiar with the matter told Reuters on Thursday. Musk's attorney Marc Toberoff sent a letter to the states' top law officers on Tuesday in which he argued they should provide a process for competitive bidding to determine fair market value of OpenAI's charitable assets to "protect the public's beneficial interest," as the startup is working on removing the control of its non-profit, according to the sources. "Elon is engaging in lawfare. We remain focused on our mission and work," OpenAI spokesperson said in a statement. The startup previously said the valuation of its charitable assets will be determined by independent financial advisors. Financial Times reported the letter earlier in the day. Sam Altman co-founded OpenAI alongside Musk and others, and became one of the technology world's biggest names after the 2022 launch of the artificial intelligence tool ChatGPT. Backed by Microsoft, OpenAI was valued at $157 billion in October after raising $6.6 billion from investors. Reuters first reported the ChatGPT maker's plan to revamp its corporate structure so its for-profit business would be independent from non-profit control in September. The company outlined the plan in detail late December, saying it would create a public benefit corporation to make it easier to "raise more capital than we'd imagined" and the plan would result in "one of the best resourced non-profits in history." Musk, who owns AI startup xAI, is suing OpenAI in courts in an effort to block OpenAI's conversion, which it had argued as a departure of the mission he funded the company on. The court is likely to rule on the preliminary injunction Musk's lawyers had applied for later this month. Delaware Attorney General Kathy Jennings weighed in on the case by sending the court an amicus brief on Dec. 29, stating she is currently reviewing OpenAI's proposed changes. "That Delaware is on record asserting that it is closely monitoring the situation should definitely undercut a judge's willingness to enjoin a transaction Musk and Encode characterize as dangerous, unwise, or the product of fiduciary violations," Darryll Jones, Professor of Law at Florida A&M University wrote in a blog. Encode is an AI safety non-profit that joined Musk's efforts to block OpenAI's for-profit transition. California Attorney General Rob Bonta, who also has jurisdiction, has not commented on the case, despite a letter from Meta urging him to block it.

Musk asks state AGs to auction off OpenAI stake in nonprofit restructuring, sources say

(Reuters) - A lawyer for billionaire Elon Musk has asked attorney generals in the states of California and Delaware to push OpenAI to auction a major stake in its business to decide fair value of its charitable asset during its corporate restructuring, sources familiar with the matter told Reuters on Thursday. Musk's attorney Marc Toberoff sent a letter to the states' top law officers on Tuesday in which he argued they should provide a process for competitive bidding to determine fair market value of OpenAI's charitable assets to "protect the public's beneficial interest," as the startup is working on removing the control of its non-profit, according to the sources. "Elon is engaging in lawfare. We remain focused on our mission and work," OpenAI spokesperson said in a statement. The startup previously said the valuation of its charitable assets will be determined by independent financial advisors. Financial Times reported the letter earlier in the day. Sam Altman co-founded OpenAI alongside Musk and others, and became one of the technology world's biggest names after the 2022 launch of the artificial intelligence tool ChatGPT. Backed by Microsoft, OpenAI was valued at $157 billion in October after raising $6.6 billion from investors. Reuters first reported the ChatGPT maker's plan to revamp its corporate structure so its for-profit business would be independent from non-profit control in September. The company outlined the plan in detail late December, saying it would create a public benefit corporation to make it easier to "raise more capital than we'd imagined" and the plan would result in "one of the best resourced non-profits in history." Musk, who owns AI startup xAI, is suing OpenAI in courts in an effort to block OpenAI's conversion, which it had argued as a departure of the mission he funded the company on. The court is likely to rule on the preliminary injunction Musk's lawyers had applied for later this month. Delaware Attorney General Kathy Jennings weighed in on the case by sending the court an amicus brief on Dec. 29, stating she is currently reviewing OpenAI's proposed changes. "That Delaware is on record asserting that it is closely monitoring the situation should definitely undercut a judge's willingness to enjoin a transaction Musk and Encode characterize as dangerous, unwise, or the product of fiduciary violations," Darryll Jones, Professor of Law at Florida A&M University wrote in a blog. Encode is an AI safety non-profit that joined Musk's efforts to block OpenAI's for-profit transition. California Attorney General Rob Bonta, who also has jurisdiction, has not commented on the case, despite a letter from Meta urging him to block it. (Reporting by Harshita Mary Varghese in Bengaluru and Krystal Hu in New York; Editing by Christopher Cushing)

Elon Musk Pushes California, Delaware Attorneys-General To Force OpenAI Stake Auction Amid Bitter Legal Battle With Sam Altman - Meta Platforms (NASDAQ:META), MONARCH STAFFING INC by Monarch Staffing, Inc. (OTC:MSTF)

Elon Musk has requested the attorneys-general of California and Delaware to mandate an auction of a substantial portion of OpenAI's stake. What Happened: Musk's legal representative, Marc Toberoff, reached out to the top legal officers of the states on behalf of major AI investors, advocating for an open bidding process, reported Financial Times on Thursday. However, OpenAI has no intention of conducting such an auction, the report noted, citing according to a source familiar with the company's position. See Also: Elon Musk Hosts X Spaces With Afd's Alice Weidel After Successfully Endorsing Trump: Share Views On Nuclear Power And Future Of Europe With Far Right German Leader Musk's legal team contends that an auction is essential to ensure the non-profit receives maximum value for its assets. Sources suggest that the non-profit's stake in the proposed public benefit corporation could be worth billions. The attorneys general have not yet responded to Musk's request. Subscribe to the Benzinga Tech Trends newsletter to get all the latest tech developments delivered to your inbox. Why It Matters: The dispute originates from OpenAI's shift from a non-profit to a for-profit entity, a transition Musk has opposed. The Sam Altman-led company plans to become a public benefit corporation, requiring the non-profit to relinquish control over its operations. Earlier, the "Godfather of AI," Geoffrey Hinton, expressed support for Musk's stance. Meta Platforms Inc. META has also backed Musk, arguing that OpenAI should not convert assets developed under its non-profit status for private gain. OpenAI's valuation soared to $157 billion last year. The AI startup has received about $14 billion in investment from Microsoft Corporation MSTF. Image via Wikimedia Commons Check out more of Benzinga's Consumer Tech coverage by following this link. Read Next: Stephen King Slams Elon Musk's H-1B Visa Stance: 'Musk Thinks Smart Immigrants Can Stay - The Rest of You Washing Dishes ... Get Lost' Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors. METAMeta Platforms Inc$608.64-1.50%Overview Rating:Good62.5%Technicals Analysis1000100Financials Analysis400100WatchlistOverviewMSTFMONARCH STAFFING INC by Monarch Staffing, Inc.$0.000001-%Market News and Data brought to you by Benzinga APIs