OpenAI is firing back at Elon Musk and his lawsuit, saying the co-founder originally wanted OpenAI to be a for-profit company.

Elon Musk is suing to prevent OpenAI from transitioning to a for-profit company. The mercurial executive says the transition betrays OpenAI’s original goals of developing AI safely and ethically. Musk has filed multiple lawsuits in an effort to block OpenAI’s transition, including an injunction aimed at preventing the company from moving forward until the court case can play out. If OpenAI is not able to make the transition to a for-profit within two years, the company will be on the hook for much of the money it received in its latest investment round.

According to OpenAI, however, Musk’s legal challenges are disingenuous and stem from his desire to block the company from further competing against his own AI company, xAI.

Elon Musk’s latest legal filing against OpenAI marks his fourth attempt in less than a year to reframe his claims. However, his own words and actions speak for themselves—in 2017, Elon not only wanted, but actually created, a for-profit as OpenAI’s proposed new structure. When he didn’t get majority equity and full control, he walked away and told us we would fail. Now that OpenAI is the leading AI research lab and Elon runs a competing AI company, he’s asking the court to stop us from effectively pursuing our mission.

You can’t sue your way to AGI. We have great respect for Elon’s accomplishments and gratitude for his early contributions to OpenAI, but he should be competing in the marketplace rather than the courtroom. It is critical for the U.S. to remain the global leader in AI. Our mission is to ensure AGI benefits all of humanity, and we have been and will remain a mission-driven organization. We hope Elon shares that goal, and will uphold the values of innovation and free market competition that have driven his own success.

The Emails

OpenAI then goes on to cite specific emails in which Musk questioned the decision to create the company as a nonprofit.

November 20, 2015:

I think this should be independent from (but supported by) YC, not what sounds like a subsidiary.

Also, the structure doesn’t seem optimal. In particular, the YC stock along with a salary from the nonprofit muddies the alignment of incentives. Probably better to have a standard C corp with a parallel nonprofit.

By September 2017, Musk and OpenAI agreed the company should eventually transition to a for-profit, at which time Musk “demanded majority equity, absolute control, and to be CEO of the for-profit.” Below is a copy of the email Musk sent to fellow co-founder Ilya Sutskever:

Sounds good. The three common stock seats (you, Greg and Sam) should be elected by common shareholders. They will de facto be yours, but not in the unlikely event that you lose the faith of a huge percentage of common stockholders over time or step away from the company by choice.

I think that the Preferred A investment round (supermajority me) should have the right to appoint four (not three) seats. I would not expect to appoint them immediately, but, like I said I would unequivocally have initial control of the company, but this will change quickly.

The rough target would be to get to a 12 person board (probably more like 16 if this board really ends up deciding the fate of the world) where each board member has a deep understanding of technology, at least a basic understanding of AI and strong & sensible morals.

Apart from the Series A four and the Common three, there would likely be a board member with each new lead investor/ally. However, the specific individual new board members can only be added if all but one existing board member agrees. Same for removing board members.

There will also be independent board members we want to add who aren’t associated with an investor. Same rules apply: requires all but one of existing directors to add or remove.

I’m super tired and don’t want to overcomplicate things, but this seems approx right. At the sixteen person board level, we would have 7/16 votes and I’d have a 25% influence, which is my min comfort level. That sounds about right to me. If everyone else we asked to join our board is truly against us, we should probably lose.

As mentioned, my experience with boards (assuming they consist of good, smart people) is that they are rational and reasonable. There is basically never a real hardcore battle where an individual board vote is pivotal, so this is almost certainly (sure hope so) going to be a moot point.

As a closing note, I’ve been really impressed with the quality of discussion with you guys on the equity and board stuff. I have a really good feeling about this.

Lmk if above seems reasonable.

Elon

OpenAI says Musk also make clear around this time that he wanted to be CEO of the for-profit company. Musk even went so far as to create the “Open Artificial Intelligence Technologies, Inc.” public benefit corporation. At this time, however, negotiations broke down as the co-founders had concerns about Musk’s demands.

We came close to accepting Elon’s terms. As we told him, “We really want to work with you. We believe that if we join forces, our chance of success in the mission is the greatest.”

However, we felt his proposal was not compatible with the mission, saying: “The current structure provides you with a path where you end up with unilateral absolute control over the AGI. You stated that you don’t want to control the final AGI, but during this negotiation, you’ve shown to us that absolute control is extremely important to you.” As we told Elon, “The goal of OpenAI is to make the future good and to avoid an AGI dictatorship.”

We concluded, “Thus we are concerned that as the company makes genuine progress towards AGI, you will choose to retain your absolute control of the company despite current intent to the contrary.”

At this point, Musk broke off negotiations and took his previous offers off the table.

Emails Also Portend the Showdown Between Ilya Sutskever and Sam Altman

The emails give an interesting glimpse into the concerns that ultimately led Sutkever to lead a boardroom coup against CEO Sam Altman, one that briefly ousted him from the company.

In the email cited above, where Sutskever and Greg Brockman expressed concerns about Musk’s demands, Sutskever also expressed concerns about Sam Altman’s judgment and desire to be CEO.

Sam:

When Greg and I are stuck, you’ve always had an answer that turned out to be deep and correct. You’ve been thinking about the ways forward on this problem extremely deeply and thoroughly. Greg and I understand technical execution, but we don’t know how structure decisions will play out over the next month, year, or five years.

But we haven’t been able to fully trust your judgments throughout this process, because we don’t understand your cost function.

• We don’t understand why the CEO title is so important to you. Your stated reasons have changed, and it’s hard to really understand what’s driving it.
• Is AGI truly your primary motivation? How does it connect to your political goals? How has your thought process changed over time?

Conclusion

OpenAI’s emails provide a damning picture of Musk’s motivations, including his acknowledgment that OpenAI would be better off being a for-profit. The emails certainly go a long way toward undermining Musk’s court case, and add support to OpenAI’s assertion that Musk is trying to cripple a potential competitor.

The emails also adds credence to reports that Sutskever and the OpenAI board led the coup against Altman over concerns about decisions he was making, and whether those decisions were an abandonment of OpenAI’s original goal of safe AI development.