Musk seeks up to $134bn from OpenAI, Microsoft in damages over fraudulent partnership

Elon Musk has escalated his legal battle with OpenAI and Microsoft, demanding damages ranging from a staggering $79 billion to $134 billion, in what has become one of Silicon Valley’s most dramatic courtroom clashes over the future — and soul — of artificial intelligence.

In filings submitted to a US federal court, the Tesla chief executive and founder of AI firm xAI alleges that OpenAI, the organisation he helped launch nearly a decade ago, betrayed its original nonprofit mission by transforming into a commercial powerhouse in close partnership with Microsoft. Musk argues that this shift amounted to fraud, enriching OpenAI and the software giant at the expense of the principles on which the company was founded.

The damages request came just a day after a judge rejected OpenAI and Microsoft’s final attempt to block a jury trial, clearing the way for proceedings scheduled for late April in Oakland, California, according to multiple reports.

At the heart of Musk’s claim is OpenAI’s meteoric rise. Court papers cite valuations placing the company at around $500 billion, and argue that Musk — who contributed roughly $38 million in seed funding in 2015 — deserves a proportionate share of that success. His lawyers likened his role to that of an early-stage investor whose modest initial stake later yields exponential returns.

“Just as an early investor in a startup may realise gains many orders of magnitude greater than the initial investment,” the filing states, “the wrongful gains earned by OpenAI and Microsoft — now subject to disgorgement — far exceed Musk’s original contributions.”

According to the lawsuit, Musk’s legal team estimates that OpenAI derived between $65.5 billion and $109.43 billion in alleged wrongful gains, while Microsoft is accused of profiting between $13.3 billion and $25.06 billion from Musk’s financial backing as well as his technical insight and strategic guidance. Both OpenAI and Microsoft have flatly denied the allegations.

Musk resigned from OpenAI’s board in 2018, later launching his own AI venture, xAI, in 2023. He filed suit against OpenAI in 2024, directly challenging co-founder Sam Altman’s decision to steer the organisation toward a for-profit model—an evolution Musk says contradicts its founding ideals.

OpenAI has dismissed the lawsuit as meritless. “Musk’s claims are baseless and part of an ongoing pattern of harassment,” the company said in a statement, adding that it looks forward to rebutting the allegations at trial. It described the latest damages demand as “unserious” and intended solely to fuel that campaign.

The legal offensive does not stop there. Musk’s xAI is also locked in a separate lawsuit against Apple and OpenAI over the integration of ChatGPT into Siri and Apple Intelligence. In that case, Musk alleges that Apple’s App Store practices unfairly disadvantage rival AI products such as xAI’s Grok — a claim that has survived an initial bid for dismissal.

As the trials loom, Musk’s courtroom crusade has become emblematic of a deeper struggle over control, profit and principle in the fast-evolving AI landscape, where fortunes are vast, ideals are contested, and the stakes could reshape the industry’s future.

With IANS inputs