Musk v Altman: Much ado about nothing

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0:33Hello and welcome to Decoder. I'm Nilay Patel, Editor-in-Chief of The Verge, and Decoder is my show about big ideas and other problems. Today I'm talking with Liz Lopato, who spent the last month covering the Musk v. Altman trial and all of its chaos. You'll hear her describe the courthouse as a zoo and explain that there are protests of one kind or another happening outside every single day. Both Elon Musk and Sam Altman are big personalities, and people have lots of feelings about both of them in the AI industry. And somehow, after all of this, nothing really happened. The jury found that Elon had filed his lawsuit after the statute of limitations had run out.

1:06You'll hear Liz explain exactly why the jury had to find that and what else is going on here. Beyond the technicalities of the statute of limitations, this trial was nominally about OpenAI's conversion to a for-profit entity from a non-profit one, and if the way OpenAI went about that conversion cost Elon Musk money. But I think we all know this case was really about Elon Musk being mad at Sam Altman, or at OpenAI, for being successful without him, and wanting Sam and the company punished in some way. So in a room full of very emotional, untrustworthy, unreliable narrators all fighting with each other, did anyone even have a reputation left to lose?

1:41Is there a floor here for the AI industry? Liz has a lot of thoughts here. I always enjoy having her on the show. Here's Liz Lopato on Musk v. Altman. Here we go.

2:01Liz Lopato, you are a senior chaos reporter here at TheVerge.com. You just covered the Sam Altman-Elon Musk trial. Welcome to Decoder.

2:08Liz Lopatto:Always a pleasure to be here. I feel like it's always some new, relatively insane thing that we're talking about. We have to stop meeting under these circumstances. I think these are your favorite circumstances. They are my favorite circumstances. A few times a year, we drive you absolutely batty by sending you to cover something. And this trial was 100 % one of those situations. The copy got increasingly unhinged. I think the audience liked it. But you were in the courtroom for the majority of Musk v. Altman. You got to see a bunch of the testimony live as these guys took the stand, as Mira Mirati and others took the stand.

2:43We'll start at the high level. I think the audience probably knows Elon Musk lost. But what was this case about, and what were the vibes in the courtroom?

2:50Liz Lopatto:There are two things that we should distinguish. There was what the case was ostensibly about, and then there was what the case was actually about. And those are two entirely separate things. So ostensibly, the case was about the violation of a charitable trust, which was that Elon Musk had donated a bunch of money to OpenAI Foundation. And then they created a for-profit. He thinks that's a violation of his charitable trust. And also, the timing of that was right around what is known as the blip, when Sam Alton was briefly removed and brought back. Put a pin in that. It's going to be a board here.

3:25Liz Lopatto:That's sort of what we're ostensibly there for. And because it was around the blip, Microsoft was accused of aiding and abetting. And Microsoft very quickly became my favorite part of the case. That's what we were theoretically doing. But in reality, there had been so many changing legal strategies around this. This case was filed, I think, two years ago in state court and then withdrawn and then put in federal court. And And, you know, there's just been sort of a myriad of things that have shuffled around since then, including like a charge that got dropped right before we went to court. To me, I think that the main point of this was punishing Sam Olsen and maybe trying to kneecap OpenAI.

4:05Liz Lopatto:And, you know, this is like a case where it's like the two worst people you know are fighting. So it's kind of hard to root for anyone. The most common response that I tended to get when I would talk about this to people or when I would post about it on social media was like, can they both go to jail? That's kind of the vibe. The courtroom was, it was a little bit of a zoo during Musk's testimony. We had one woman who got called down in front of the courtroom by the judge and chewed out because she had been taking photos in the courthouse. On the very last day, we had a guy who was ejected because he had been recording the proceedings in the courtroom.

4:42Liz Lopatto:So there was some shenanigans, and then every time we would leave the courthouse, there would be some kind of protest going on, usually behind the lawyers as they were trying to give their daily summary and spin what they had done in the courtroom. And then parading behind them would be a guy in a cyber truck holding an Elon Musk sign. Perfect. So that was what that was. I want to come to the legal issues and particularly the ruling from the jury. There's a lot of mechanics there. I just want to stick on the point that the goal here was for Elon Musk to punish Sam Altman and connect that to the protests and the comments you're getting on social media and certainly the comments we get every time we publish anything about AI.

5:23Is there any reputation left to damage for Sam Altman or the AI industry as a whole? Because it seems like both these guys are at all-time lows. I'm thinking about jury selection when the judge had to just say, it seems like no one likes Elon Musk, but we're going to have to trust that the jury will be fair. What what's even left to take away here?

5:44Liz Lopatto:I kind of think there's no floor about these things. One of the things that I will say is that, like, from my perspective, I also view Sam Altman as untrustworthy, which is one of the things that this trial was like really driving home as like one of the points that, you know, Elon Musk's lawyers were making. And like, I agree. I also think everybody else in the trial was totally untrustworthy. It was like not just Sam Altman. It was all of them. And one of the things that I found myself thinking about was that I think the person who really got damaged the most was Mira Marati, who, at least as far as I know, didn't have a reputation as being somebody who was untrustworthy or conniving or whatever.

6:25Liz Lopatto:and then in testimony from former OpenAI board members, we found out that she was one of the reasons that Sam Altman got fired and then was immediately texting Sam Altman like, oh no, Sam, it's very bad. It's very bad, Sam. You remember during this blip that Altman was fired for, what was it? It was a pattern of being untrustworthy or something. He was not consistently candid with the board, which could have meant anything. Anything. And the thing that I remember, because I gossip with a bunch of journalists and we are ferocious gossips, is all of us were like, oh, he did something illegal. Let's find out what illegal thing he did.

7:03Liz Lopatto:Which, as far as I can tell, no, he didn't It was just that he was engaging in what I would characterize as relatively normal executive shenanigans Where you are maintaining your control of the company by sort of pitching your subordinates against each other A strategy that is widely used in corporate America, by the way So, you know, she wouldn't tell people that she was involved in his removal And she was like the CEO, the interim CEO, and then like publicly supported him and then like publicly was involved in bringing him back. I think someone on the stand, I don't remember who, said Mira was waiting to see which way the wind would blow and didn't realize she was the wind.

7:44Liz Lopatto:That was Helen Toner, who was one of the board members who stepped down in this debacle. because, you know, obviously, like, as this proceeded, it became clear that by firing Sam in the way that they had fired him, they had jeopardized the entire company. One of the things that I thought was really interesting from Sam's testimony that I did believe, by the way, is that he thought about just taking a job at Microsoft and getting paid and not having to deal with any headaches anymore. And, like, I can certainly imagine after having been really publicly and embarrassingly fired and like having gone through, you know, all of the annoying things that one goes through as a manager and especially as a CEO, just be like, you know what?

8:23Liz Lopatto:I just, I just want a paycheck. Who among us has not thought about retiring to a comfy job at Microsoft? Right. And so like when he was talking about that, I was like, yeah, that actually, that I believe that that would, that sounds real. And then he obviously changed his mind. But one of the things that I thought was really interesting about that is that also Helen Toner, who, you know, we saw in deposition testimony, one of the things that we found out was that she was involved in potentially trying to sell open AI to Anthropic, a company that she has some ties to through the EA movement. And so, again, no one here comes off looking good.

9:02Liz Lopatto:I thought for a while that Helen Toner was maybe the most reliable witness we had heard from in the cross on the deposition. It was like, so tell us about your relationship with Anthropic. And I was like, aww. That's actually the thing that struck me about this entire trial. Hell and Tone are being wrapped up in anthropic is one thing, but the entire AI industry at the top is like 10 people who are wrapped up in each other emotionally, professionally. They're writing each other up sequence emails, particularly to Elon, just full of flattery and praise about how great everyone is. The idea that they're going to make AGI is taken for granted in some way.

9:39Like these are the leaders of a new religion in like a real way you can see it. And then they all lack any management instincts or emotional maturity to deal with the kinds of tasks they're putting in front of them or the stakes or the money. And you can just see it. Like it's in the trial. It's in the evidence that they're cracking under the pressure that they're putting one another under. And there's no outlet. In fact, the only outlet might have been Satya Nadella, who comes off as the coolest cucumber around because he's just like, I don't know, is this going to make money? Don't call me. Like that's basically his whole vibe.

10:13Liz Lopatto:Again, I loved Microsoft in this case. I'm not a Microsoft user, really. I'm familiar with their products, which, by the way, their opening statement was so good. It was just a list of things of Microsoft products you might have used at some length. Remember us? It was fantastic. They were just like, we're not sure why we're here, but you know us. We're Microsoft. You've used Windows, surely. Do you like Xbox? That's us. So that was great. There was really a sense in which the only adult in the room at any given time was somebody from Microsoft. We saw that over and over again, where Satya Nadella is like, don't text me.

10:54Liz Lopatto:Don't leave a paper trail. His emails are not especially spicy. Like, I think the spiciest they got is something like him being like, well, we don't want to be IBM and have them be Microsoft. This is open up. He doesn't want to be the commodity provider of data center hardware and their software be the important thing, which is what happened to IBM and Microsoft. That's right. Which, by the way, totally understandable sentiment, I feel. Yeah, especially from Microsoft. He's like, I know what's happening here. That was like the spiciest thing we got out of Microsoft. Like, that was it. So these are people who, in addition to sort of having the management chops and like having the sense of like what you do and don't do, were also just like a little bit less dramatic.

11:36Liz Lopatto:And like over and over again, we'd have a witness and there would be some like really brutal and devastating cross from OpenAI. And then Microsoft would get up and be like, was Microsoft there? Was Satya Nadella there? Does anyone from Microsoft know anything about any of this? No further questions, Your Honor. Amazing. Great. It was like a beautiful punchline every single time. That's very funny.

12:05We're going to pause here for a quick break. We'll be right back.

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13:05So Microsoft obviously put a bunch of money into OpenAI. Nadella had that famous quote about being above them, below them, around them, referring to Azure and its dependency in Azure and how to deploy OpenAI's models. But eventually the trial comes down to, did they illegally convert this charity to a for-profit and along the way take something from Elon Musk? What was the actual jury verdict on those counts?

13:28Liz Lopatto:The jury verdict was that Elon Musk filed the suit too late and the statute of limitations had run out. I'm going to be real with you. I think that had there not been a statute of limitations question, he still would have lost. This was a pretty weak case, but we're going to start with the statute of limitations stuff because that is like the most relevant. And then I will walk you through all the rest of it because we did do all of this in exhausting detail. And that was the last month of my life. So one of the things that was part of Musk's case was that he claimed that he didn't think his trust had been violated until the blip.

14:07Liz Lopatto:And so for this reason, he was still within the statute of limitations. And the law, I believe, is that you need to file within three years. We saw a bunch of evidence that he had been read in repeatedly on the conversion to a for-profit, the various investment rounds. I found myself unexpectedly sympathetic to Sam Altman during this trial. So congrats, Sam. He kept trying to get Elon to like him again. There would be these emails where it was like, hey, we're raising this round. Or he'd be emailing people to see what kind of mood Musk was in, if it was a good time to talk to him. because, you know, he just wanted to make sure that Elon knew what he was doing.

14:47Liz Lopatto:And like, was it a good time for them to chat? Was Elon in a good mood? Which, by the way, like if you have a person whose job it is to tell people whether you're in a good mood or not, I strongly feel that suggests that you maybe are difficult. Yeah. How deep is today's K-hole? Let's find out before we ask for money. There was evidence of Musk being read in every single step of the way, knowing about the Microsoft investments, knowing about the fact that they were creating this for-profit. In fact, there was a bunch of email evidence that he thought that making OpenAI a non-profit had been a mistake, that it should have been for-profit from the jump.

15:30Liz Lopatto:So there's a ton of evidence that separately from the timeline question suggests that OpenAI would have won this case, not least because the charitable trust thing, the definition of a charitable trust, and I'm going to mangle this slightly because I'm not a lawyer, but you have to have a specific purpose on your donations. And so you have to have established that this is a trust. And then the next thing you have to establish is that that trust was violated. Just looking at all of the donations, which we did in some depth, there were no strings attached that any of us saw. No one at all remembered there being any strings attached.

16:08Liz Lopatto:One of the more devastating lines of testimony was that Siobhan Zillis was asked, like, were there strings attached to these donations? She was like, well, not that I recall. And then in the closing statement, OpenAI's lawyer is like, man, not even the mother of his children can corroborate his account. Okay. That's brutal. So, you know, there were no strings attached. And then we had a financial analysis that showed that that money was gone very, very quickly, that they had been spending, because AI is expensive, they had like spent it. and they had spent it in the way that it was meant to be spent.

16:40Liz Lopatto:All the other money that happened afterwards had nothing to do with Elon Musk. So there was that. One of the things that I'm just going to put an asterisk on here that I thought was interesting, but didn't I think right about was that Musk had been paying the rent for OpenAI. They actually had to go back and ask him for money because Neuralink was in the building. And when they got accountants to try to get their books in order so that they could proceed, the accountants were like, oh, yeah, you can't be supporting somebody else's for-profit business in this building. You need to get rent money from Neuralink.

17:14Liz Lopatto:They need to pay you back. And so my suspicion is not that we went into this in any depth, but that Musk had been taking a write-off on all of those donations on this building and had been also taking that write-off on the space that Neuralink was using, which is why then that money had to be paid back to OpenAI. There's a lot here. I mean, there's a lot of just Elon Musk. There's infinitely complicated, like fractally expanding OpenAI layers of companies within the nonprofit that have board control and people can fire Sam Altman. All of that seems enormously complex and maybe worth some future litigation.

17:51But the jury just went with statute of limitations. And it seems like that's maybe all they should have been talking about. If that's what was going going to end the case this quickly? Why do you think that we spent all the time in the substance and the complication when Elon had just filed too late?

18:07Liz Lopatto:Several things, because I did get people asking me about this as well. Isn't statute of limitations a legal issue? Why didn't the judge rule on this? Yeah. And the answer is there was a question of fact, which was when should Elon have known what was going on? And he's saying, I didn't know until the blip. And so I'm within the statute of limitations and everybody else was saying he's known the entire time it's over. That was the thing that was being litigated. It wasn't the only thing that was being litigated, but that was the one that ended up mattering is that the jury was like, yeah, he definitely like knew all of this was happening.

18:39If the goal was to trash Tim Altman, of course you would pick the blip, right? Because then you get to pull every document and email and text message from the blip into the trial, into evidence. You get to publish it. We published it. But was that the goal? Was Elon just saying, I only knew about this when Sam Altman got fired in order to put all of that damaging evidence into the record?

19:01Liz Lopatto:I think that was what was actually going on. I think it was also meant to distract OpenAI because they did have to pay this very expensive law firm to do some very expensive work to defend them. They didn't just defend the statute of limitations. they defended all of the subclaims and all of the other sorts of things as well, which is why there is so much in our stories, is that they were bringing forward as much as they could to defend every single part of every possible claim, because they had to. I think that making Sam Altman look bad, distracting Sam Altman, maybe removing resources as Altman approached an IPO, I think those were probably the primary goals.

19:40Liz Lopatto:Musk would have been happy with a win. I think he certainly would have been thrilled to force OpenAI to give up a bunch of money, even if it went back to the OpenAI Foundation as he belatedly decided it should go. There are any of a number of things that I think he would have taken as icing on the cake. And, you know, he's said that he's going to continue this through the appeals process. Elon appeared at a Forbes conference and he said, I think this is a dangerous precedent to set. If someone can take a nonprofit and convert it to a for-profit that undermines all charitable giving in America.

20:11I don't think Elon understands how precedent works, but it seems regardless of that, he's going to keep tying OpenAI up in litigation for as long as he can. Oh yeah.

20:21Liz Lopatto:I mean, he said something very similar to that on the stand, by the way. He has some pet phrases he likes and dangerous precedent to set undermines all charitable giving in America are on the list. I think he does intend to tie OpenAI up in litigation for as long as he possibly can, you know, bleeding them for cash, which is a strategy that we've seen other billionaires use, most famously Sheldon Adelson, who went after a Las Vegas paper, if I remember correctly, not because like they had done anything wrong and they were in fact ruled not to have done anything wrong, but because defending the case was so financially expensive that they nearly went under.

21:00Liz Lopatto:That is a strategy you can use if you have unlimited resources is you can just bleed somebody out. I do feel like if you're Elon Musk and you're really worried about rich people using their charities to enrich themselves, there are a handful of people in his direct orbit running the country that you might want to take a closer look at. This seems like he's saying it because he just wants to keep screwing with OpenAI. Oh, absolutely. There's no doubt in my mind that this is personal for him. And the thing that I am unable to quite tell, I've been thinking about this for a while, is he personally pissed off at Sam Altman or is he just affronted that OpenAI succeeded without him?