OpenAI hits back at Musk filing, disputes “cherry-picked” notes and sets out $130 billion structure claim

OpenAI has accused Elon Musk of presenting a misleading record of early negotiations about its governance and corporate structure, saying he “cherry-picks and publishes snippets” from private journal entries obtained in discovery and circulates them without the surrounding context. The company said the excerpts distort what happened during 2017 discussions over creating a for-profit arm and the talks that followed.

In a statement published on its website, OpenAI said founders and Musk discussed creating a for-profit arm in 2017, but negotiations ended when OpenAI refused to give Musk full control. It said the company rejected a proposal to merge the organisation into Tesla, and that Musk later quit, urging the team to raise money on its own, despite giving them “0% chance” of success.

Two entities

OpenAI also sought to clarify its current structure, saying it is organised as two main entities, a public benefit corporation (PBC) and a controlling non-profit that owns equity in the PBC “currently valued at approximately $130 billion”. OpenAI said the non-profit is now called the OpenAI Foundation and is being positioned as a well-resourced non-profit.

The rebuttal lands amid intensifying legal conflict between Musk, who left OpenAI in 2018 and now runs rival artificial intelligence group xAI, and the ChatGPT developer. US District Judge Yvonne Gonzalez Rogers said earlier this month there was “plenty of evidence” to warrant a jury trial on Musk’s allegations that OpenAI violated its founding mission in a restructuring towards a for-profit model. OpenAI has denied the claims and has described the litigation as “baseless” and part of an “ongoing pattern of harassment”.

OpenAI’s latest statement goes beyond broad denials, aiming directly at what it says are selective quotations in Musk’s filing. One line at the centre of the dispute is a journal entry that reads “conclusion is we truly want the b-corp,” which OpenAI says Musk highlighted without the broader notes showing the founders debating multiple options, including remaining a non-profit if sufficient funding could be raised.

Securing capital

The company’s account frames the 2017 talks as an attempt to secure the capital required to compete in frontier AI research without ceding control to any single individual. OpenAI says Musk pressed either for a merger into Tesla or for full control of the new structure, and that the talks collapsed when OpenAI refused.

OpenAI also set out what it described as Musk’s shifting stance during a January 2018 fundraising dialogue. It said Musk initially congratulated the group on fundraising progress and supported an initial coin offering (ICO) concept to raise $10 billion, before withdrawing support and warning OpenAI it was “on a path of certain failure relative to Google,” according to OpenAI’s narrative. The company said that by February 2018 Musk had concluded OpenAI could not raise sufficient funding and resigned.

A further strand of the statement touches on Shivon Zilis, a longtime Musk associate, whom OpenAI says joined its board briefly and later stepped off as Musk prepared to launch xAI and began public attacks and litigation. OpenAI presents this as part of a wider campaign, calling Musk’s latest lawsuit his fourth attempt at these claims and “part of a broader strategy of harassment” intended to advantage xAI.

Wrongful gains?

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Musk, for his part, has argued in recent court filings that he deserves “wrongful gains” tied to OpenAI’s and Microsoft’s subsequent value creation, with Reuters reporting he is seeking up to $134 billion from OpenAI and Microsoft based on an expert analysis. OpenAI and Microsoft have challenged the damages methodology and asked the judge to limit the expert’s testimony.

With trial preparations under way in Oakland, the case is becoming a public contest over who owns the story of OpenAI’s origin, and what promises, if any, were made about remaining a non-profit. OpenAI’s strategy appears designed to keep the argument anchored in documentary context rather than headline quotations, while Musk is pressing for a jury to decide whether the organisation departed from its original mission.

The Recap

• OpenAI says Musk cherry-picked journal entries in court filing.
• Non-profit controls equity in PBC valued at approximately $130 billion.
• Musk's suit is his fourth attempt, the company said.