Meta Joins Musk in Opposition to OpenAI's For-Profit Transition

All you need to know about OpenAI Vs Musk For-Profit Debate

OpenAI recently fired back at Elon Musk's lawsuit attempting to block its transition to a for-profit organisation. The company released a series of emails detailing how its former co-founder Musk initially championed a for-profit conversion for OpenAI before he departed from the company following the inability to gain "unilateral control" and majority equity. The company also requested a California federal judge to deny Musk's motion to stop OpenAI's transition to a for-profit company. In February 2024, Musk filed a lawsuit against OpenAI and his fellow founding members, CEO, Sam Altman and co-founder Greg Brockman, alleging violations of the terms of the founding agreement. These included: firstly, ensuring that OpenAI acts as a non-profit developing artificial general intelligence (AGI) instead of maximising profits and secondly, remaining open-source, balancing only countervailing safety considerations. Responding to this claim, OpenAI suggested that the founding agreement he mentions is "a fiction Musk has conjured to lay unearned claim to the fruits of an enterprise he initially supported, then abandoned, then watched succeed without him". In June 2024, just one day before the scheduled trial of the case before a California court, Musk dropped the lawsuit without any explanation. In August 2024, Musk revived his lawsuit against OpenAI alleging violations of the company's founding mission, The Verge reported. The lawsuit also added that Altman and Brockman had "assiduously manipulated Musk into co-founding their spurious non-profit venture" under the guise of promises like OpenAI promoting safety and transparency rather than striving for profit-maximisation. Musk also described the OpenAI saga as a "textbook tale of altruism versus greed". In October 2024, in a court filing requesting a California court to dismiss Musk's complaint, OpenAI accused Musk of harassment to gain a competitive advantage, Bloomberg reported. On November 14, 2024, Musk expanded his lawsuit against OpenAI adding federal anti-trust claims among others and bringing on Microsoft as a defendant. He alleged that the companies sought to monopolise the market for AGI and sideline competitors. Two days later, on November 16, 2024, Musk released a series of emails displaying the anticompetitive partnership between the companies while also hinting at the power struggles between Altman and Musk, The Verge reported. Besides this, on November 29, 2024, Musk filed a preliminary injunction against OpenAI, its co-founders, and collaborator/investor Microsoft, among others, to block OpenAI's transition to a for-profit enterprise. The tech billionaire also accused the defendants of engaging in unlawful activities like discouraging investment in rival AI companies and engaging in self-dealing transactions alongside previous claims. Notably, in October 2024, the Financial Times reported that OpenAI had asked its investors to avoid investment in rival start-ups like Anthropic and Elon Musk's xAI as the company moved toward securing $6.6 billion in its latest funding round. On December 13, 2024, OpenAI published a series of emails asserting that Elon Musk initially supported OpenAI's transition into a for-profit of his own accord. This comprised a timeline of events spanning from November 2015, when OpenAI was launched as a nonprofit, to March 2023, when Musk established OpenAI's rival xAI. The significant events within the timeline are outlined below: Besides Musk, Mark Zuckerberg's Meta has also called upon California's Attorney General Rob Bonta to block OpenAI's planned transition stating that it would set a dangerous precedent of enabling startups to reap the benefits of a nonprofit status until they change into for-profit, The Wall Street Journal reported. Notably, while Zuckerberg is typically at loggerheads with Musk, it seems to have currently changed its stance, instead supporting Musk's claims against OpenAI.

Meta aligns with Musk to challenge OpenAI's shift to for-profit status

Editor's take: A complex legal and ethical battle is unfolding over whether OpenAI can switch to for-profit status. The result could have significant implications for AI development as well as the delicate balance between nonprofit missions and for-profit ambitions in the tech industry. Meta Platforms has entered the fray in the ongoing dispute between OpenAI and Elon Musk, urging California's Attorney General Rob Bonta to block OpenAI's planned transition to a for-profit company. This move aligns Meta with Musk in a battle that pits some of Silicon Valley's most influential AI players against each other. Meta wrote to Attorney General Bonta last week, arguing that allowing OpenAI to become a for-profit entity would set a dangerous precedent. The social media giant contends that such a move would enable startups to exploit the benefits of nonprofit status until they are on the brink of profitability. "OpenAI's conduct could have seismic implications for Silicon Valley," Meta stated in the letter. The company further elaborated on the potential consequences, suggesting that if OpenAI's new business model is deemed valid, it could lead to a situation where "non-profit investors would get the same for-profit upside as those who invest the conventional way in for-profit companies while also benefiting from tax write-offs bestowed by the government." In response to these concerns, OpenAI Chairman Bret Taylor has assured that the company will maintain a nonprofit arm following any potential restructuring. This nonprofit entity would retain full value in its ownership stake of the for-profit division and have "an enhanced ability to pursue its mission" of ensuring AI benefits humanity. The dispute between OpenAI and Elon Musk has been ongoing, with Musk filing a series of legal complaints against the AI company. Musk, who co-founded OpenAI in 2015 but left in 2018 amid a power struggle, has accused the company of betraying its original nonprofit mission and colluding with Microsoft, its largest investor, to dominate AI development. Meta's involvement in this conflict is hardly surprising, given its position as one of OpenAI's biggest competitors. The company has invested billions in developing its own AI technology to rival ChatGPT. Also, OpenAI has close alliances with Microsoft and Apple, both major competitors of Meta. In its letter, Meta expressed support for Musk and Shivon Zilis, a business and personal associate, in their efforts to represent public interests regarding OpenAI's potential transition to for-profit status. "Although we ask your office to take direct action, we believe that Mr. Musk and Ms. Zilis are qualified and well-positioned to represent the interests of Californians in this matter," Meta wrote. The conflict has intensified recently, with OpenAI publishing internal documents to counter Musk's request for a preliminary injunction to block its transition to a for-profit company. These documents - as well as a post by OpenAI - state that Musk had previously supported the idea of a for-profit structure for OpenAI. "When he didn't get majority equity and full control, he walked away and told us we would fail," OpenAI wrote.

Meta Platforms joins forces with Elon Musk to try and block OpenAI's for-profit transition - SiliconANGLE

Meta Platforms joins forces with Elon Musk to try and block OpenAI's for-profit transition Meta Platforms Inc. has joined Elon Musk in his efforts to derail OpenAI's plans to convert itself into a for-profit company. On Friday, the Wall Street Journal reported that Meta had penned a letter to California Attorney General Rob Bonta, arguing that by allowing the artificial intelligence firm to become a for-profit company, it would "set a dangerous precedent", enabling other startups to enjoy the benefits of being a nonprofit organization until they become profitable. In its letter, Meta wrote that OpenAI's conduct would have "seismic implications" for the industry. "If OpenAI's new business model is valid, non-profit investors would get the same for-profit upside as those who invest the conventional way in for-profit companies while also benefiting from tax write-offs bestowed by the government," Meta wrote. OpenAI has previously said its transition plans would see it continue to maintain a nonprofit arm, which would receive the full value from its ownership stake in the new for-profit entity, and emerge with "enhanced ability to pursue its mission", which is to ensure AI benefits humanity. Meta is a major competitor to OpenAI, having spent billions of dollars developing rival large language models such as LLama 3, which competes with the likes of GPT-4o. In addition, OpenAI is closely associated with two of Meta's major rivals, including Microsoft Corp. and Apple Inc. The former is OpenAI's biggest investor, while the latter has tightly integrated its models within its Apple Intelligence AI features. The letter from Meta comes after Space Exploration Technologies Corp. and Tesla Inc. founder Elon Musk filed an injunction against OpenAI earlier this month, asking a judge to block its transition to a for-profit company. Musk, who also competes against OpenAI through his AI startup xAI Corp., has made a number of legal challenges against the company, accusing it of betraying its nonprofit mission in pursuit of investor profits. Meta, in its letter, said it supports the efforts of Musk and Shivon Zillis, a business associate of the xAI founder, who claim they are representing the interests of the public in attempting to stop OpenAI going ahead with its transition. "Although we ask your office to take direct action, we believe that Mr. Musk and Ms. Zilis are qualified and well-positioned to represent the interests of Californians in this matter," Meta wrote. The alliance between Musk and Meta Chief Executive Mark Zuckerberg (pictured) is an unlikely one, as the two entrepreneurs have themselves butted heads in the past, and at one stage even agreed to battle it out in a cage fight, though (sadly!) that bout never occurred. Meta's and Musk's complaints come after OpenAI closed on a $6.6 billion round of funding that brought its total value to $157 billion. At the time of that round, OpenAI told investors they could take their money back if it doesn't succeed in its bid to become a for-profit company within two years. The company has attempted to fight back, and last week released a series of internal documents that allegedly show Musk himself had previously pushed for it to become a for-profit entity. Musk has previously claimed he was misled that OpenAI would be purely nonprofit when he first invested in it. However, the documents reportedly show that Musk wanted the company to change its legal structure. In 2017, they reveal that he instructed his wealth manager to create a public-benefit corporation called Open Artificial Intelligence Technologies Inc. in Delaware. Two days prior to that move, Musk said in an email to OpenAI's co-founder Ilya Sutskever that it should adopt a for-profit structure and that he should "unequivocally have initial control of the company." Meanwhile, other documents show a series of email correspondence between Musk and OpenAI's co-founders dated back to 2018, in which they discuss creating a for-profit entity. In the documents, Musk allegedly proposed a structure that would give him majority ownership of the company. The authenticity of those documents has not been verified. Musk cut ties with the company later that year, after OpenAI's co-founders rejected a proposed merger with Tesla.

Meta Urges US Authorities to Stop OpenAI From Going For-Profit: Report

OpenAI's plans to become non-profit being opposed in US Along with Meta, Elon Musk is also against OpenAI's plans Musk was one of OpenAI co-founder Meta Platforms is urging California's attorney general to block OpenAI's planned conversion to a for-profit company, the Wall Street Journal reported on Friday. In a letter to Attorney General Rob Bonta dated Thursday, Meta said that allowing OpenAI to become a for-profit company would set a dangerous precedent of allowing startups to enjoy the advantages of nonprofit status until they are poised to become profitable, WSJ reported. "OpenAI's conduct could have seismic implications for Silicon Valley. If OpenAI's new business model is valid, non-profit investors would get the same for-profit upside as those who invest the conventional way in for-profit companies while also benefiting from tax write-offs bestowed by the government," the WSJ report quotes Meta as saying in the letter. Meta and the California AG's office did not immediately respond to a Reuters request for comment. Earlier on Friday, OpenAI asked a federal judge in California to reject a request by billionaire Elon Musk to halt the ChatGPT maker's conversion to a for-profit company. Musk sued OpenAI and its CEO Sam Altman in August, claiming they violated contract provisions by putting profits ahead of the public good in the push to advance AI. In November, Musk asked US District Judge Yvonne Gonzalez Rogers in Oakland for a preliminary injunction blocking OpenAI from converting to a for-profit structure. "While our work remains ongoing as we continue to consult independent financial and legal advisors, any potential restructuring would ensure the nonprofit continues to exist and thrive, and receives full value for its current stake in the OpenAI for-profit with an enhanced ability to pursue its mission," OpenAI chairman Bret Taylor said in a statement. In its letter, Meta said it supported an effort by Musk to represent the interests of the public in deciding whether OpenAI will be allowed to become a for-profit company, the WSJ report added. Musk, who was an OpenAI co-founder, has since launched a competing artificial intelligence company, xAI. © Thomson Reuters 2024

Meta is willing to do whatever it takes to prevent OpenAI from becoming a for-profit company - Softonic

Zuckerberg's company is asking the California attorney general to deny the conversion of OpenAI into a for-profit company Meta has requested California Attorney General, Rob Bonta, to prevent OpenAI from converting into a for-profit company, according to an article in The Wall Street Journal. In a letter sent on Thursday, Meta warned that allowing this change would create a dangerous precedent, as startups could take advantage of tax benefits as non-profit organizations before transforming into profit-making entities. "OpenAI's conduct could have seismic implications for Silicon Valley," the letter states. Bret Taylor, president of OpenAI, stated that the organization will maintain a non-profit arm after the restructuring. According to him, this structure will enhance its mission to "ensure that artificial intelligence benefits humanity." However, Meta, a direct rival of OpenAI, fears that the latter's alliance with Microsoft and Apple will give it a significant advantage in AI development. OpenAI's relationship with Microsoft, its largest investor, and Apple, which integrated ChatGPT into its technology, has further fueled the discord with the parent company of Facebook. Elon Musk, co-founder of OpenAI and now one of its biggest critics, has also questioned this transition, claiming that OpenAI betrayed its original mission by becoming a for-profit entity. In recent documents, OpenAI alleged that Musk initially supported the idea of a hybrid model but withdrew when he did not gain majority control of the organization. Musk, however, insists that he was manipulated into supporting an initiative that went against his initial vision. Meta also supports Musk and Shivon Zilis, his business associate, to represent the public interest in the dispute. The company emphasized that both are "qualified and well-positioned" to address this issue before the U.S. Attorney General. This tension reflects the great struggle among tech giants for control of the future of AI. Musk accuses OpenAI, which recently reached a valuation of 157 billion dollars after a funding round, of favoring lucrative investors while using its non-profit structure as a cover. In short, a battle marked by cross interests and personal rivalries that is far from over, and that could end up defining the AI landscape.

Meta asks California attorney general to block OpenAI's conversion to for-profit | TechCrunch

Facebook's parent company, Meta, is supporting Elon Musk's effort to block OpenAI's conversion from a nonprofit company into a for-profit one. As reported by The Wall Street Journal, Meta sent a letter to California attorney general Rob Bonta, arguing that allowing the shift would have "seismic implications for Silicon Valley." And while the company asked Bonta to take "direct action," it also said Musk and former OpenAI board member Shivon Zilis "are qualified and well-positioned to represent the interests of Californians in this matter." "If OpenAI's new business model is valid, non-profit investors would get the same for-profit upside as those who invest the conventional way in for-profit companies while also benefiting from tax write-offs bestowed by the government," Meta wrote. Meta has become one of OpenAI's big competitors in the AI market. Musk, meanwhile, was originally a co-founder at OpenAI before eventually splitting from the company, starting rival xAI, and taking legal action that includes seeking an injunction to stop its transition into a for-profit. (Zilis is also a plaintiff in Musk's lawsuit.) OpenAI responded by publishing emails and texts from Musk and arguing that "he should be competing in the marketplace rather than the courtroom."

Mark Zuckerberg's Meta sides with rival Elon Musk in fight to stop...

Meta boss Mark Zuckerberg wants to put the kibosh on Sam Altman-led OpenAI's push to shed its non-profit status - a move that puts the tech titan on the same side as his longtime rival Elon Musk. The parent company of Facebook and Instagram warned that allowing the ChatGPT maker's planned switch to a for-profit structure would have "seismic implications for Silicon Valley," according to a letter sent to California Attorney General Rob Bonta. "OpenAI should not be allowed to flout the law by taking and re-appropriating assets it built as a charity and using them for potentially enormous private gains," Meta wrote in the letter, which was dated last Thursday and first reported by the Wall Street Journal. Earlier this month, Musk and former OpenAI board member Shivon Zilis asked a federal judge in San Francisco to block the pioneering AI firm from becoming a for-profit. His attorneys likened OpenAI to a "Frankenstein, stitched together from whichever corporate forms serve the pecuniary interests of Microsoft and Altman at any given moment." The injunction filing was an escalation in Musk's lawsuit against OpenAI - which he co-founded in 2015 but later turned against after clashing with Altman. Musk has since launched his own artificial intelligence startup, xAI. Meta sided with Musk in its letter to Bonta despite Zuckerberg and Musk trading barbs in public and private for years -- and nearly facing off in a cage match last year. "Although we would also urge your office to take direct action, we believe that Mr. Musk and Ms. Zilis are qualified and well positioned to represent the interests of Californians in this matter," the letter said. Bonta's office and OpenAI did not immediately return requests for comment on Meta's letter. OpenAI, which has been led by a nonprofit board since 2015, is planning to restructure as a for-profit public benefit corporation. The firm's nonprofit arm would continue to exist but would no longer be in control. Altman's firm fired back at the injunction request last week, publishing a trove of emails and texts while arguing that Musk initially supported for-profit status for OpenAI - but left after he lost a bid to secure full control and a majority stake. Last week, Altman claimed that he's "not that worried" about Musk's influence over President-elect Trump's administration. Musk has emerged as a key adviser to Trump and is set to co-lead the Department of Government Efficiency (DOGE), which is tasked with eliminating government waste. "It would be profoundly un-American to use political power, to the degree that Elon has it, to hurt your competitors and advantage your own businesses," Altman said at a New York Times conference. "And I don't think people would tolerate that. I don't think Elon would do it."

Elon Musk Finds An Unlikely Ally In Mark Zuckerberg's Meta In His Fight Against Sam Altman's OpenAI - Meta Platforms (NASDAQ:META)

xAI founder Elon Musk has received support from Mark Zuckerberg's Meta Platforms Inc. META in his fight against Sam Altman-led OpenAI's for-profit transition. What Happened: In a letter to California Attorney General Rob Bonta, Meta argues that OpenAI should not convert assets developed under its non-profit status for private gain, as reported by The Wall Street Journal. The letter suggests that Musk is well-suited to represent Californian interests in this matter. This move is significant given Musk's recent public disagreements with Mark Zuckerberg over AI advancements. OpenAI, originally a non-profit, gained commercial success with ChatGPT, generating substantial revenue. CEO Sam Altman has stated that transitioning to a for-profit model is essential for attracting investors and sustaining growth. However, Meta contends that this shift could have major implications for Silicon Valley, potentially encouraging other startups to exploit non-profit status for initial funding. See Also: Micron Technology Stock Jumps In Pre-Market After Securing $6.1B Investment For US Chip Manufacturing Meta's concerns also stem from its competitive interests, as Zuckerberg aims for Meta AI to become a leading assistant globally. The company is committed to transparency in AI development and insists on OpenAI adhering to its original charitable mission. Why It Matters: The conflict over OpenAI's transition has been brewing for some time. Musk has been vocal about his opposition, even filing for a court injunction to block the transition. Musk's legal team has requested an injunction from Judge Yvonne Gonzalez Rogers to prevent OpenAI from becoming a for-profit entity. Further complicating the situation, OpenAI has accused Musk of undermining the company after failing to gain control during earlier negotiations. OpenAI revealed that Musk initially supported restructuring the organization into a for-profit entity in 2017 but abandoned the idea when his proposal to hold majority control was rejected. This legal and public battle highlights the broader concerns about the commercialization of AI technology and the ethical implications of transitioning from non-profit to for-profit models. The outcome of this dispute could set a precedent for other AI companies considering similar transitions. Read Next: Nancy Pelosi's Stock Pick Broadcom Shoots 15% In Friday Pre-Market As Broadcom CEO Sees 'Opportunity Over The Next 3 Years In AI' Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Photos courtesy: Shutterstock Market News and Data brought to you by Benzinga APIs

Meta CEO Mark Zuckerberg Joins Elon Musk's Fight Against OpenAI

Whistleblower Suchir Balaji's suicide intensifies scrutiny on AI ethics and transparency. Mark Zuckerberg, CEO of Meta, has joined Elon Musk in opposing OpenAI's controversial move to become a for-profit entity. In a formal letter to California Attorney General Rob Bonta, Meta urged the state to block the AI firm's restructuring, claiming it undermines its nonprofit origins and risks distorting Silicon Valley's startup ecosystem. Meanwhile, concerns over AI ethics and transparency have escalated following the tragic death of whistleblower Suchir Balaji, a former OpenAI researcher, adding a somber tone to the ongoing debates. Meta Platforms has joined Elon Musk in opposing OpenAI's transition to a for-profit model. According to a Wall Street Journal report, Meta sent a formal letter to California Attorney General Rob Bonta, warning that the AI firm's restructuring could exploit nonprofit resources for private gain. The letter accuses the firm of betraying its foundational goals, established when it launched as a nonprofit organization in 2015. Meta CEO Mark Zuckerberg echoed Musk's concerns that the company's shift could pave the way for Silicon Valley startups to misuse nonprofit models for financial advantage. Both Zuckerberg and Musk are calling for a legal investigation to ensure accountability in the firm's transition. Elon Musk, a co-founder of OpenAI, has long criticized the company's for-profit trajectory. He claims it contradicts the original vision of OpenAI as a public-serving nonprofit, free from corporate incentives. Besides, Musk has also filed a lawsuit recently against Microsoft and OpenAI over anti-trust claims. With Zuckerberg now in the picture, the opposition gains significant momentum. Mark Zuckerberg, despite his history of rivalry with Musk, has emerged as a key ally in this legal battle. Meta's letter emphasizes that the AI firm's shift to for-profit status could disrupt Silicon Valley's innovation ecosystem. It further warns that the move might encourage other startups to exploit nonprofit models for financial benefits. As per Wall Street Journal, Meta has called for an investigation into OpenAI's practices, including potential misuse of tax-free donations. Zuckerberg's involvement signals Meta's vested interest in maintaining ethical boundaries in AI development. Meanwhile, OpenAI defended its for-profit model in an X post, claiming Elon Musk had previously supported the idea to secure investments for advanced AI research. OpenAI also shared Musk's 2017 proposal for a for-profit entity within the company. The fight over OpenAI's future has taken a grim turn with the death of whistleblower Suchir Balaji. The 26-year-old former OpenAI researcher, who previously raised concerns about copyright breaches in AI systems, was found dead in his San Francisco apartment. Authorities ruled his death a suicide, with no evidence of foul play. Balaji's passing has amplified discussions around the high-pressure environment in AI research. Critics argue that OpenAI's pursuit of profit compromises its ethical responsibilities, further escalating tensions in the industry. Amid this, the recent developments from Meta CEO Mark Zuckerberg has sparked further discussions in the market. As the case unfolds, critics argue that OpenAI's profit-driven approach contradicts its foundational goals. This raises broader questions about accountability, transparency, and ethical responsibility in AI development. Meanwhile, OpenAI's video generation platform has gone live adding another layer to its evolving AI capabilities.