Musk’s Lawsuit Against OpenAI Gets a Boost From Lina Khan’s FTC

Federal antitrust regulators connected Friday added value to portions of Elon Musk’s suit seeking to forestall OpenAI from restructuring itself into a afloat for-profit company.

In a brief filed with a national tribunal successful California, attorneys for the Federal Trade Commission and the Department of Justice’s antitrust part did not straight enactment Musk’s claims that OpenAI and Microsoft person colluded successful an anticompetitive “de-facto merger,” but they did impulse the tribunal to beryllium skeptical astir 1 of the defenses made by OpenAI’s ineligible team.

OpenAI began arsenic a non-profit, funded successful portion by Musk, and past converted itself into a for-profit institution controlled by a non-profit committee of directors. It is now planning to wholly abstracted from that non-profit committee and go a nationalist payment corporation, allowing it to beryllium fiduciarily liable to investors alternatively than beholden to a charitable mission.

A cardinal contributor to OpenAI’s maturation and the unit for it to go a profitable concern has been the much than $13 cardinal successful investments and different enactment it’s received from Microsoft, a publically traded institution that competes successful the AI market. Reid Hoffman, the laminitis of LinkedIn, is simply a subordinate of Microsoft’s committee and was a subordinate of OpenAI’s committee until March 2023. A apical Microsoft executive, Dee Templeton, was a non-voting subordinate of OpenAI’s committee from November 2023 until July 2024.

Musk has argued that the Microsoft representatives’ positions connected the OpenAI committee violated national antitrust laws that prohibit idiosyncratic from serving connected the governing committee of competing companies, which is known arsenic an interlocking directorate. OpenAI has responded by saying the statement is moot due to the fact that neither Hoffman nor Templeton are members of OpenAI’s committee anymore.

The FTC and DOJ lawyers, however, wrote that “ending an interlocking directorate, e.g., by having a idiosyncratic resign from a firm board, is not sufficient, connected its own, to moot a assertion nether Section 8 of the Clayton Act. … In resolving this matter, the Court should debar holding otherwise.”

The national agencies did not measurement successful connected Musk’s galore different allegations, including that OpenAI CEO Sam Altman misled him and conspired with Microsoft to person investors not to money Musk’s ain AI startup, xAI.

While the suit has often taken the code of a soap opera feud betwixt billionaires, the FTC and DOJ filing is different motion that regulators person a adjacent oculus connected OpenAI’s modulation plans. Delaware’s lawyer wide has filed a little successful the lawsuit and said she volition instrumentality action if she believes OpenAI is violating the instrumentality and Meta has asked the California lawyer general’s bureau to artifact OpenAI’s restructuring.