Musk seeks up to $134 billion in damages from OpenAI and Microsoft

Elon Musk is seeking between $79 billion and $134 billion in damages from OpenAI and Microsoft. In the lawsuit, Musk claims that OpenAI defrauded him by abandoning its original nonprofit mission, which was the organization’s original organizational structure when he co-founded it in 2015. The damages sought, which could reach up to $134 billion, are tied to OpenAI’s current $500 billion valuation and Musk’s initial $38 million seed donation. Musk’s legal team argues that he should be compensated like an early startup investor, receiving returns far exceeding his initial contribution.

To calculate these figures, financial economist and expert witness C. Paul Wazzan analyzed Musk’s 2015 contributions alongside the technical and business input he provided to OpenAI’s early team. Wazzan determined that Musk’s seed donation of $38 million entitles him to a significant portion of OpenAI’s current value. This calculation represents a 3,500-fold return on Musk’s investment, which is broken down into specific claims of wrongful gains:

• Wrongful gains of $65.5 billion to $109.4 billion for OpenAI.
• Wrongful gains of $13.3 billion to $25.1 billion for Microsoft, which currently holds a 27% ownership stake in OpenAI.

The scale of the damages demand stands in contrast to Musk’s personal fortune, which currently hovers around $700 billion, making him the world’s richest person. This net worth exceeds that of Google co-founder Larry Page, the world’s second-richest person, by a wealth gap of $500 billion. Additionally, Tesla shareholders previously approved a $1 trillion pay package for Musk, the largest corporate pay package in history.

In response to the legal action, OpenAI has dismissed the lawsuit. The company reportedly sent a letter to investors on Thursday, characterizing the lawsuit as an “ongoing pattern of harassment.” In the letter, OpenAI warned its business partners that Musk will make “deliberately outlandish, attention-grabbing claims” as the case proceeds. The legal battle is scheduled to head to trial in April. The case will be heard in Oakland, California, located about 15 miles from San Francisco.

Why it matters

The lawsuit underscores the escalating legal conflict between Musk and OpenAI, with the massive damages claim serving as a focal point ahead of the upcoming April trial.