Elon Musk to go ahead with lawsuit against OpenAI

Elon Musk to go ahead with lawsuit against OpenAI

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Episode Transcript

(00:00):
Welcome back to the Elon Musk Podcast.
I'm your host Will Walden. Today we're digging into the
latest twist in the Elon Musk versus open AI legal drama.
Musk is moving forward with his lawsuit even after Open AI
announced it would keep non profit control over its for
profit business. Your ultimate authority for

(00:22):
daily Elon Musk news. Exploring the world's biggest
ideas with your host Will Walden.
There's something new everyday. And to unpack what this really
means and whether Musk has a point at all, I'm joined by tech
business analyst and investor Jordan Kessler, who's worked
with and advised several major players in AI and venture back

(00:44):
companies. Jordan, thanks for.
Being here. Always good to be on Will.
So Open AI says it's nonprofit parent is still in charge, but
Elon Musk says that's just optics and nothing changes is.
This a. Meaningful reversal or all of
this is corporate theatre. So it's theatre with
consequences. The nonprofit is technically

(01:07):
still in control. But what Musk is highlighting,
and he's not wrong, is that the structure hasn't solved the
fundamental conflict. Open AI is still building closed
source AI under a business modeldesigned to serve investors like
Microsoft. The nonprofit's control looks
thin when you dig into who's on the board and how aligned they
are with Sam Altman's goals. That's the dilemma.

(01:30):
So let's talk about those goals.Altman wants to push the
frontier of AGI, and that takes money, billions and billions of
it. Does this structure let him
raise that kind of money? Open AI wants to eat from both
plates. It wants public trust by being a
nonprofit controlled entity, butit also wants mega scale funding
from investors who expect serious returns.

(01:52):
The December plan to restructureinto a more traditional for
profit model reflected that tension.
Investors were telling them we'll fund you, but we need
conventional equity and more control.
That pressure hasn't gone away. This walk back doesn't resolve
it. It just delays the reckoning.
Now, Elon's lawsuit claims Open AI betrayed its founding
mission. Do you think that's legal

(02:12):
strategy or like a personal feudbetween Elon and Sam Altman?
Musk helped start Open AI as a nonprofit to balance what he saw
as dangerous, unregulated AI development.
He left when the vision shifted toward private control.
Now that Open AI is worth $300 billion and partnered with
Microsoft, he sees that shift asa betrayal.

(02:35):
But let's be real, he's also running a competitor, XAI, so
he's not just acting out of principle.
He wants to slow Open AI down. That doesn't mean his legal
argument has no merit, but it's not pure.
Open AI says his lawsuit is baseless and meant to block
their progression. Could this actually hurt Open AI

(02:55):
long term? Yes, not because of the lawsuits
outcome, Who knows how that'll go in court, but because of the
uncertainty it creates. Investors hate ambiguity and
this hybrid nonprofit for profitmodel is hard to price and even
harder to trust. If you're managing billions in
capital, are you going to back acompany whose controlling board
doesn't have to act in your interest?

(03:18):
Musk's lawsuit amplifies that doubt for now.
Open AI said Softbank's $30 billion is still on the table,
and also Microsoft hasn't even flinched.
Does that give them sort of likea lifeline going forward?
Microsoft's relationship is strong because it's already

(03:38):
deeply integrated Open AI's models into its products.
SoftBank is more opportunistic. They'll go where the growth is,
but the more governance uncertainty you have, the more
risk those funds carry. If this lawsuit drags out and
regulators keep probing, some ofthat money could evaporate.

(03:58):
Now regulators California and Delaware are both reviewing Open
a is business structure. Could those reviews force
another change in the future? Absolutely.
This isn't just about Musk anymore.
If either state's attorney general decides Open AI isn't
complying with nonprofit rules, they could demand changes,

(04:20):
possibly structural ones. That's a legal risk hammer
hanging over every board decision Open AI makes from now
until that review ends. So big picture here, what does
this fight say about how we build and govern companies
working on AGI going forward? It says we don't have a working
model yet. Everyone's trying to square a

(04:42):
circle. How do you build trillion dollar
tech on nonprofit principles? Open AIS model is messy because
they're trying to be the first. Musk's lawsuit is one way to
test if this model holds up under pressure.
If it doesn't, future labs may have to choose nonprofit for
real or for profit, with transparency and regulation.

(05:03):
You can't hide behind a hybrid governance forever.
Jordan Kessler, thanks for breaking that down.
Always sharp, buddy. Appreciate it Will.
Hey, thank you so much for listening today.
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(05:24):
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