Elon Musk, who once was a big investor in OpenAI in its early formation, has filed a first amended complaint against the company, its founder Sam Altman, and Gregory Bockman, which now has added Microsoft as a defendant and antitrust claims for alleged efforts by OpenAI to discourage funders from backing “actively trying to eliminate competitors” like xAI by “extracting promises from investors not to fund them”:
201. Further, during OpenAI’s latest funding round in early October 2024, on information and belief, Altman, in concert with and at the urging of other Defendants, conditioned investors’ ability to participate in the heavily oversubscribed offering on their agreeing not to invest in OpenAI’s competitors, specifically calling out xAI. As reported in the Financial Times on October 3, 2024:
OpenAI has asked investors to avoid backing rival start-ups such as Anthropic and Elon Musk’s xAI, as it secures $6.6bn in new funding and seeks to shut out challengers to its early lead in generative artificial intelligence. . . . During the negotiations, the company made clear that it expected an exclusive funding arrangement, according to three people with knowledge of the discussions.
Seeking exclusive relationships with investors restricts rivals’ access to capital and strategic partnerships. . . . OpenAI can command unusual terms and an outsized valuation because investors believe the company could dominate the next wave of AI innovation, which they argue will be as significant a shift in consumer behaviour as the internet or mobile.
“Because the round was so oversubscribed, OpenAI said to people: ‘We’ll give you allocation but we want you to be involved in a meaningful way in the business so you can’t commit to our competitors,’” according to one person with knowledge of the deal.
Ex. 25 at 1. First Amended Complaint, Musk v. Altman.