Follow live updates from the third day of Elon Musk’s OpenAI trial testimony.
It was 2018 and Elon Musk had a very busy year.
His electric car company, Tesla, was struggling with production problems. He had a plan to take it private, but kept pissing off regulators. SpaceX, his rocket company, was just starting to show momentum. And OpenAI, the non-profit artificial intelligence lab he was supposed to join, didn’t attract much of his attention.
“I didn’t even have time to attend the board meetings,” Mr. Musk said on Wednesday, the second day of his testimony in the trial that pits him against OpenAI, its two co-founders and the company’s giant partner, Microsoft.
The seeds of today’s court battle were sown that year. The management of OpenAI, which was founded as a non-profit, considered adding a for-profit company to its structure. Mr. Musk had no problem with that, he said, but he wanted to make sure the nonprofit was still in charge. He now regrets not taking a more active role before he left the lab in early 2018 and giving her the money to get off the ground in the first place.
“I was a fool to give them free funding to create a start-up,” Mr Musk said when asked by his lawyer, Steven Mol. “I gave them $38 million basically for free to create an $800 billion company.”
In an expected month-long trial in federal court in Oakland, California, Mr. Musk argues that OpenAI breached its founding agreement when it took on Microsoft as an investor and began building commercial products. It is asking for $150 billion in damages and for OpenAI to dissolve the for-profit company it created last year.
Today, OpenAI is one of the most influential companies in the technology industry. Of course, Mr. Musk emerged from that rough year to become the richest man in the world. But the relationships he had at the time with Sam Altman, OpenAI’s CEO, and Greg Brockman, the company’s president, are long since severed.
The hard feelings between the tech moguls were hard to miss in the process. Mr. Musk and Mr. Altman have known each other for years and hung out in the same elite Silicon Valley circles. But the mutual admiration – which led to their creation of OpenAI in 2015 – turned into an unapologetic enmity.
As Mr. Altman and Mr. Brockman watched from the courtroom gallery, right behind their lawyers, Mr. Musk, the first witness in the trial, kept describing his former co-founders as a fraudulent pair who had cheated him and diverted OpenAI from its altruistic roots.
Mr. Musk described how OpenAI developed after he left the lab in early 2018, though he continued to donate money to the lab and receive updates on its progress. About a year later, Microsoft invested $1 billion in OpenAI—a sign that it was beginning to take its commercial potential seriously.
Mr. Musk said he was aware of Mr. Altman’s efforts to create a profitable company and get money from Microsoft. But the company has set a cap on the profits that will flow to investors, so he doesn’t see it as a big problem.
OpenAI and Microsoft also had a plan to cancel their partnership if OpenAI created an artificial general intelligence, essentially a machine that could do everything a human brain could do. That provided further reassurance, Mr Musk added.
But he said he became very concerned when Microsoft said in early 2023 that it had invested $10 billion in OpenAI. This was after the release of ChatGPT, which quickly became an industry sensation. Mr Musk said he texted Mr Altman asking: “What the hell is going on?” and call the investment a “bait and switch.”
“They basically turned a nonprofit into a $20 billion company,” he said.
Microsoft “isn’t going to invest $10 billion in something unless they think they’re going to get a very big return,” he added. “There’s no other way they’re going to think about it.” Mr. Altman and OpenAI offered him equity in the company after Microsoft’s investment, Musk said. But he didn’t take it.
“To be honest, it felt like a bribe,” Mr. Musk said.
But William Savitt, OpenAI’s general counsel, suggested that Mr. Musk’s testimony contradicted what he had said in court testimony. Did he give OpenAI $38 million — as he said in his testimony — or $100 million? In a deposition, he said it was $100 million.
Their exchange was combative. “Your questions are not simple,” Mr. Musk said. “They’re basically designed to fool me. In another rejoinder, he said: “The classic yes-or-no answer is not that simple. For example, if you ask, ‘Will you stop beating your wife?’
Judge Yvonne Gonzales Rogers, who is presiding over the trial, interrupted him. “No, we’re not going there,” she said.
Mr. Savitt also has a complicated relationship with Mr. Musk. He once represented Mr. Musk and Tesla in a securities fraud lawsuit over the automaker’s acquisition of solar company SolarCity. He then switched sides, representing Twitter against Mr Musk after the billionaire tried to back out of his 2022 takeover bid for the social media company.
After Mr. Musk completed his purchase of Twitter, now X, the company sued Mr. Savitt’s law firm, Wachtell, Lipton, Rosen & Katz, alleging that the firm’s $90 million payoff for representing Twitter under previous management was “unjust enrichment.” The social network rejected her lawsuit last year.
Mr. Savitt went back to a series of emails that Mr. Musk discussed in his earlier testimony and showed how they could be interpreted very differently. One email, Mr. Savitt said, demonstrated that when OpenAI explored moving to a for-profit model in late 2017, Mr. Musk wanted a large stake and full control of the organization. This included the ability to elect a majority of the board members.
Mr. Savitt displayed other old emails in which Mr. Musk promised the other founders of OpenAI that he would create a profitable company that he would control.
As his testimony stretched into the afternoon, Mr. Musk was visibly frustrated with Mr. Savitt, calling his questions “definitely difficult.”
Mr. Musk also lashed out at Mr. Altman. Mr. Savitt displayed an email from 2018 in which Shivon Zilis — a longtime employee of Mr. Musk, the mother of his four children and a former OpenAI board member — asked Mr. Musk whether she should stay around OpenAI to provide him with information about the company.
Mr. Musk responded that Mr. Altman “did not inform the board, which is why he was fired from the company.” OpenAI’s board briefly ousted Mr. Altman in late 2023, but Ms. Zilis was not on the board at the time. He returned after five days of negotiations.
Mr Musk now has his own artificial intelligence company xAI, which has become part of SpaceX. Mr. Savitt suggested that Mr. Musk’s suit was just an attempt to delay OpenAI’s progress as its engineers improved the xAI chatbot, Grok. He asked Mr Musk if he agreed that Grok was “much further behind” than ChatGPT.
“Not anymore,” Mr. Musk said.
(The New York Times has sued OpenAI and Microsoft, alleging copyright infringement of news content related to AI systems. Both companies have denied the suit’s claims.)
Mr. Musk’s trial and testimony are scheduled to continue on Thursday.
Ryan Mac contributed reporting from Los Angeles.
