OpenAI countersues Elon Musk, accuses him of ‘bad-faith’ takeover attempt

OpenAI Hits Back at Elon Musk in Escalating Legal Fight

OpenAI has filed a sweeping countersuit against Elon Musk, alleging that the billionaire entrepreneur has waged a malicious campaign to derail the company’s mission and gain control of its artificial intelligence technologies for his own benefit.

The lawsuit comes in response to Musk’s original 2024 complaint, in which he accused OpenAI of betraying its nonprofit mission and becoming a “closed-source subsidiary” of Microsoft. OpenAI now claims that Musk is using legal threats, media influence, and a fabricated acquisition offer to interfere with its operations and block its planned restructuring into a for-profit benefit corporation.

Musk’s “Sham Bid” and Hidden Motives

OpenAI’s countersuit centers around what it calls a “sham bid” for the company’s assets, supposedly orchestrated by Musk and a group of investors. The bid, which valued OpenAI at $97.375 billion, was allegedly unsupported by real financing or analysis and appears to reference a sci-fi novel favored by Musk—Iain M. Banks’ Look to Windward.

According to the lawsuit, the intent of the bid was not acquisition, but rather to obtain internal documents through legal discovery and disrupt OpenAI’s investment pipeline, potentially costing the company up to $10 billion if it fails to complete its restructuring.

“This was not a legitimate offer,” OpenAI said. “It was a deliberate effort to sabotage our organization and slow its progress.”

From Co-Founder to “AGI Dictator” Aspirant?

The filing claims Musk's efforts date back to 2018, when he attempted to merge OpenAI with Tesla, demanding sole control, majority equity, and the CEO title of a new for-profit arm. OpenAI’s board rejected the proposal, warning that his demands ran counter to its mission of building safe and equitable AGI (artificial general intelligence).

“The goal of OpenAI is to make the future good and to avoid an AGI dictatorship,” the board wrote at the time. “So it is a bad idea to create a structure where you could become a dictator if you chose to.”

After departing OpenAI, Musk later founded xAI, which now competes directly with OpenAI and has integrated with X (formerly Twitter), giving it unprecedented access to user data and forming the foundation for what OpenAI calls Musk’s “Colossus” supercomputer.

OpenAI Alleges Harassment and Interference

The lawsuit accuses Musk of escalating attacks, including:

• Planting negative press about OpenAI

• Using his control of X to spread misinformation

• Encouraging state attorneys general to initiate investigations

• Filing legal actions intended to chill competition

OpenAI also claims Musk attempted to poach employees and seek access to confidential information under false pretenses while building his own rival AI firm.

“Musk has tried every tool available to harm OpenAI,” the company said. “This is not about mission—it’s about Musk’s ambition.”

A Threat to OpenAI’s Mission and Industry Stability

In its countersuit, OpenAI warns that Musk’s actions pose a threat to the broader AI ecosystem. The company points to studies labeling xAI as among the worst offenders in AI safety, while Grok, its chatbot, has been cited as a major vector for misinformation and political polarization.

OpenAI is seeking a jury trial, injunctive relief to stop Musk’s alleged campaign, and damages for what it describes as malicious and disruptive conduct.

“You can’t sue your way to AGI,” OpenAI said in a blog post. “Elon’s never been about the mission—he’s always had his own agenda.”
 

Musk’s Legal Team Responds

In a statement to Ars Technica, Musk’s attorney Marc Toberoff pushed back:

“Had OpenAI genuinely considered the bid, they would have seen how serious it was. They’d rather negotiate with themselves than engage in a bona fide transaction in the public interest.”

Toberoff called OpenAI’s restructuring plan “self-dealing” and accused its leadership of preferring to retain internal control rather than invite external oversight or scrutiny.

The Stakes: AGI, Corporate Control, and Public Trust

This legal battle arrives at a pivotal moment for the AI industry, as companies race to develop AGI technologies. OpenAI argues that allowing Musk to seize control could imperil its commitment to building AGI “for the benefit of humanity.”

“The risk of future, irreparable harm from Musk’s unlawful conduct is acute,” OpenAI warned. “Every month he escalates, further endangering our ability to serve the public interest.”

As the legal showdown unfolds, the future of AGI development—and the ethical frameworks guiding it—may hinge on the outcome. OpenAI’s case marks a decisive attempt to shield its independence and mission, while calling out what it views as a calculated effort by one of tech’s most powerful figures to seize control.

Stay with The Horizons Times for continuing coverage of OpenAI, xAI, AGI development, and the high-stakes legal and ethical battles shaping the future of artificial intelligence.