If you’re looking for a Rosetta Stone to help you understand the Elon Musk-OpenAI trial, you could do a lot worse than Musk’s testimony today—particularly when he said he “literally was a fool,” to provide OpenAI with money.
The lawsuit known as Musk v. Altman has at its center a conflict no more complex on its face than Itchy v. Scratchy, so when I say Wednesday’s testimony from Musk was clarifying, which it was, I realize the burden is on me to justify the idea that there’s any ambiguity. Here goes:
Musk originally claimed in his suit that OpenAI CEO Sam Altman and company president Greg Brockman fraudulently induced him to fund what should have been a charitable effort to bring artificial general intelligence to the world. That fraud part is gone, and the scope of the suit has since been narrowed to “unjust enrichment” and “breach of charitable trust.”
With these as the foundations of the suit, it seems like Musk’s feelings on the matter may be consequential, which is why Musk saying he was a fool might make sense as a strategy. (Gizmodo is not a law blog, by the way).
This passage from an article about Musk’s standing to sue is informative:
“[…]even if Musk proves he was duped by Altman and Brockman, he may not have standing in the first place to sue them for restructuring the company to operate a for-profit subsidiary. Some legal scholars are puzzled over why the judge allowed him to bring this claim. “The idea that Elon Musk can sue because he was a donor or used to be on the board is pretty puzzling,” says Jill Horwitz, a law professor who studies nonprofit law at Northwestern University. “Typically, it’s up to the attorneys general to bring such a claim to enforce the charitable purposes. And that’s already happened.”
About a year ago, the California attorney general wrote that Musk’s lawsuit didn’t demonstrate a clear public interest component, and suggested that Musk had selfish motives. Musk’s lawyers countered that this was a misunderstanding, and that Musk doesn’t want to own OpenAI; he just wants it to go back to being a charity. (By the way, yesterday, my colleague AJ Dellinger stress tested the idea that Elon Musk is a hero to philanthropists.)
So in other words, if I wrote a big check to someone who said they were building a free skin cancer treatment center for kids, and the recipients of my money built a for-profit botox clinic instead, the state would, hopefully, step in. But as an individual who wrote a charitable check, my money was gone before it was allegedly misallocated. The fact that charitable giving isn’t a transaction makes it tricky to resolve an issue like this with a lawsuit.
But perhaps in this example, a Musk-style lawsuit would claim the plaintiff has been injured simply on the basis that the donor feels tricked, and that he’s not going to get a plaque on the wall for the sick kids to read.
And today’s courtroom reporting from NPR makes Musk’s Wednesday testimony seem like it’s headed in this direction:
On the stand on Wednesday, under questioning from his own attorney, Musk said establishing a company like OpenAI as a non-profit gave it “the moral high ground. I guess there’s sort of a halo effect.” Also, he added, “there’s some value” in having a lab that develops “digital superintelligence” to be non-profit.“
But what you can’t do is have your cake and eat it too,” reaping the “good association” with being a non-profit and then switching to a for-profit model, Musk said.
“I was a fool who provided them free funding to create a start-up,” He said to his own lawyer in testimony, according to the New York Times. He added that he provided “$38 million of essentially free funding to create what would become an $800 billion company.”
Keep in mind that Musk’s requested remedies are for Brockman and Altman to be removed from their roles, for $130 billion to be redirected from the for-profit corporation to its nonprofit foundation, and for OpenAI to be turned back into a nonprofit. Musk seems to be saying little more than, Please rule in favor of me, and restructure this company, because its leaders made a fool of me and created a huge corporation with what was arguably my money.
But my earlier cancer center/botox clinic analogy might make this request seem a little dubious when you consider another exchange from today, as reported by the Wall Street Journal. Musk’s attorney asked him if his AI company, xAI, is an OpenAI competitor. “It is, at this point, technically competitive but much smaller than OpenAI,” he said.
According to Elon Musk’s own pep talk to employees, xAI and its parent company SpaceX are unified in their mission to “accelerate humanity’s future in understanding [the] universe, and extending the light of consciousness to the stars.” Perhaps as a consequence of sounding like he’s singlehandedly creating Starfleet, SpaceX is reportedly attempting to be valued at over $2 trillion, which would probably make it the seventh most valuable company in the world.
There’s a nine-person jury watching all of this, but its verdict will be purely advisory. Judge Yvonne Gonzalez Rogers, a district judge for the Northern District of California appointed by President Obama, will make the call.
