Elon Musk says OpenAI and Microsoft owe him $134 billion in "wrongful gains"

midian182

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WTF?! Elon Musk has a net worth of $681 billion, but he wants OpenAI and Microsoft to add another $134 billion to that figure. It's the amount Musk says they owe him as a result of his early contributions to the ChatGPT maker.

Earlier this month, a judge rejected an attempt by OpenAI and Microsoft to have Musk's 2024 lawsuit against them thrown out. The suit accuses OpenAI of breach of contract by abandoning its founding mission of creating a nonprofit that benefits humanity by moving to a for-profit model.

After a final bid by the firms to avoid a jury trial was dismissed last Thursday, Musk's lawyer revealed his client's damages requests in a court filing.

It's alleged that OpenAI gained between $65.5 billion and $109.4 billion as a result of Musk's contributions to the company. Microsoft, meanwhile, is alleged to have gained between $13.3 billion and $25.1 billion.

C. Paul Wazzan, a financial economist who is serving as Musk's expert in the case, defines the money as "wrongful gains."

The lawyers say that the amount Musk contributed to OpenAI can be measured beyond the $38 million in seed funding – around 60% of the total – he handed over during the company's startup years.

The filing claims that Musk helped OpenAI with the recruitment of key employees, introduced contacts, offered business advice, lent his "prestige and reputation" to the organization, and taught it how to scale.

"Just as an early investor in a startup company may realize gains many orders of magnitude greater than the investor's initial investment, the wrongful gains that OpenAI and Microsoft have earned – and which Mr. Musk is now entitled to disgorge – are much larger than Mr. Musk's initial contributions," Musk lawyer Steven Molo wrote.

As it has previously done during this case, OpenAI responded to the latest claims with a lengthy post. It accuses Musk of cherry-picking and publishing snippets from co-founder and CTO Greg Brockman's private journal entries without including context.

"The truth is that we and Elon agreed in 2017 that a for-profit structure would be the next phase for OpenAI; negotiations ended when we refused to give him full control; we rejected his offer to merge OpenAI into Tesla; we tried to find another path to achieve the mission together; and then he quit OpenAI, encouraging us to find our own path to raising billions of dollars, without which he gave us a 0% chance⁠ of success," the post states.

OpenAI adds that Musk is trying to slow down and disadvantage the company to benefit his own AI firm, xAI. He said he wanted to accumulate $80 billion for a self-sustaining city on Mars, and that he needed and deserved majority equity.

Musk was one of the co-founders, backers, and initial board members of OpenAI, departing the company in 2018 over what he said was a conflict of interest with Tesla.

The world's richest person says that when he was approached by Altman and Brockman to help fund the startup in 2015, he was promised that OpenAI would be an open-source, not-for-profit company focused on safely creating an artificial general intelligence (AGI) and countering the competitive threat from Google.

Musk claims the co-founders planned a for-profit switch to enrich themselves, including through a deal with Microsoft worth billions and a recent corporate restructuring.

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In 2015, Elon Musk co-founded OpenAI and provided financial support through donations, likely unrestricted and probably tax-deductible. He served as a board member with fiduciary duties for several years before voluntarily resigning in 2018 without any claims regarding equity. Until that point, OpenAI operated as a pure nonprofit organization.

Following Musk's departure, OpenAI partnered with Microsoft. Known for its own philanthropic efforts (including those of its founders, like the Bill & Melinda Gates Foundation), Microsoft entered into a licensing agreement with OpenAI nonprofit. This arrangement, which can be simplified as "renting" the OpenAI brand, involved Microsoft becoming an investor in OpenAI's for-profit arm and covering expenses such as hardware, electricity, and employee salaries. In this hybrid model, OpenAI's board remains in the nonprofit sector and receives the licensing fees from the for-profit arm.

Elon has expressed concerns that he was led to believe his donations were going to a nonprofit, but the hybrid model may not align with this perception, raising questions about its legality, suggesting that the appropriate structure might ultimately need court determination.

However, the most significant issue for OpenAI's nonprofit sector is the potential risk of the Internal Revenue Service (IRS) classifying the licensing income as "unrelated business income" due to the for-profit arm's activities not directly contributing to the nonprofit's mission. Consequently, OpenAI might be required to pay taxes on the licensing income. While the creation of the GPT OSS model under the Apache 2.0 license is a strong argument in favor of the nonprofit's mission, it may not be sufficient to prevent such a classification.
 
I know Musk is an easy target, but I'm actually with him to some extent on this. I don't think he should be compensated, but OpenAI should be paying Billions in fines for the nonsense, nonprofit thing they setup as. Frankly, all companies should be made to pay taxes on all gains made as a non-profit before they are allowed to restructure themselves as a for-profit company. This "starting out as a nonprofit until we are ready to make money" nonsense needs to end.
 
Open AI owes Musk basically everything. They wouldn't have existed without him.
Not sure how Microsoft fits into all that.
 
The richest man in the world and yet he's still not happy.
I'm having a great time and I didn't sacrifice my humanity to get here.
Console yourself with knowing that no matter how much money he has he will always be wretched and miserable. You can see when he's interviewed - much like Zuckerberg - how uncomfortable he is in his own skin. People like that tend to take out their grievances on the world around them and, unfortunately for the rest of us, they are also desperate to be the rich and in charge and will stop at very little to get there.

https://medium.com/@carmitage/elon-...50-countries-and-still-miserable-903066b1db4a
 
I know Musk is an easy target, but I'm actually with him to some extent on this. I don't think he should be compensated, but OpenAI should be paying Billions in fines for the nonsense, nonprofit thing they setup as. Frankly, all companies should be made to pay taxes on all gains made as a non-profit before they are allowed to restructure themselves as a for-profit company. This "starting out as a nonprofit until we are ready to make money" nonsense needs to end.
My thought is: Him compensated? Why? He Quit.
 
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