Elon Musk has asserted that the US Federal Trade Commission’s (FTC) concerns regarding Microsoft Corp.’s $13 billion investment in OpenAI support his allegations of anticompetitive behaviour. In a court filing, Musk argued that the FTC’s January 17 report highlights Microsoft’s efforts to dominate the artificial intelligence (AI) market, strengthening his case against OpenAI’s controversial restructuring from a nonprofit to a for-profit organisation.
Musk has requested a California federal judge to block OpenAI from completing its corporate transformation, citing the FTC’s concerns as evidence that the arrangement with Microsoft undermines competition. The FTC’s report, released in the final days of Joe Biden’s presidency, suggests that Microsoft is leveraging its partnership with OpenAI to consolidate power in cloud computing and AI.
Musk’s legal challenge against OpenAI
Musk’s legal battle with OpenAI stems from his claims that the organisation, which he co-founded as a nonprofit in 2015, has strayed from its original mission to develop generative AI for the benefit of society. Musk departed OpenAI in 2018 and launched his rival AI startup, xAI, in 2023. Since then, he has accused OpenAI’s leadership, particularly CEO Sam Altman, of abandoning the organisation’s founding principles in pursuit of profit.
In court filings, Musk alleges that OpenAI’s acceptance of billions in funding from Microsoft starting in 2019 marked a turning point, transforming it into what he describes as a corporate “behemoth” with monopolistic ambitions. Musk has warned that without immediate judicial intervention to halt OpenAI’s conversion to a for-profit structure, competitors will be unable to challenge its dominance in the burgeoning AI sector.
Government scrutiny and ongoing legal proceedings
Musk’s claims have garnered support from the Biden administration’s Justice Department, which joined the FTC on January 10 in raising concerns over overlapping board memberships at Microsoft and OpenAI. The agencies argue that these governance overlaps could stifle competition in the rapidly expanding AI market.
In a filing submitted late Monday, Musk urged the federal judge overseeing his injunction request to consider the FTC’s findings. The judge is scheduled to hear Musk’s request on February 4 in Oakland federal court.
Meanwhile, OpenAI is reportedly engaged in discussions with the California attorney general’s office about the legal process involved in restructuring its corporate framework. Bloomberg News reported last year that these talks are still in their early stages.
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OpenAI’s response
OpenAI has consistently denied Musk’s allegations, asserting that its partnership with Microsoft aligns with its mission to advance AI responsibly. In court filings, OpenAI disclosed emails and messages from Musk indicating that he had originally supported the idea of transitioning to a more traditional corporate structure to attract investment and ensure the organisation’s long-term viability.
Neither OpenAI nor Microsoft has commented publicly on Musk’s latest claims or the FTC’s report.
A broader context for AI competition
This legal battle unfolds against the backdrop of significant developments in the AI industry. On Tuesday, former President Donald Trump announced a multi-billion-dollar private sector investment to bolster AI infrastructure in the United States. Dubbed “Stargate,” the joint venture involves OpenAI, SoftBank, and Oracle, marking another milestone in the race to lead global AI innovation.
For Musk, the stakes are not merely corporate but ideological. He has long championed the development of AI as a tool for societal good, a vision he accuses OpenAI of abandoning. His company, xAI, is positioned as a challenger to what he sees as OpenAI’s monopolistic drift, promising to create AI solutions that prioritise ethical considerations.
What’s next?
The upcoming February 4 hearing will be critical in determining the future of OpenAI’s corporate structure and its partnership with Microsoft. Musk’s push for judicial intervention, bolstered by the FTC’s report, underscores the growing scrutiny of tech giants’ influence over emerging technologies.
As AI becomes increasingly integral to industries ranging from healthcare to transportation, the outcome of this case could shape the competitive landscape for years to come. For Musk, it represents a pivotal moment in his quest to hold OpenAI accountable to its founding principles, ensuring that AI development remains fair, transparent, and beneficial to society at large.
