Musk vs. Altman

0:05It was a busy few weeks at the U.S. courthouse in Oakland, California, the venue for a high-stakes trial over one of the biggest names in artificial intelligence, OpenAI.

0:19A crowd of people gathered outside every day, many of them hoping to watch the contentious trial, including our colleague Angel Au-Yeung. The mornings, there's usually a line outside the courthouse starting at 5.45 a.m. The two people on opposite sides of the trial, Elon Musk and Sam Altman, two of the co-founders of OpenAI. In fact, the lawsuit itself is called Musk v. Altman. Elon Musk is suing OpenAI for basically manipulating him into giving tens of millions of dollars to OpenAI. Musk's initial funding helped get OpenAI off the ground. And essentially, he says, OpenAI and Sam Altman as its leader misused those donations because the company abandoned its original mission of building AI for the good of humanity.

1:14And as the trial has unfolded over the past three weeks, a who's who of Silicon Valley have filed into the courthouse headed for the witness stand. As soon as they come into the security, all these photographers and videographers just start clambering up against the windows and they're just like clicking, clicking, clicking. And as the day goes on, protesters start showing up outside the courthouse. Sounds like a circus a little bit. It's a little bit like a circus. Closing arguments for the trial happened yesterday, and a verdict could come as soon as next week.

1:53Some of the things Musk wants? For Sam Altman to be removed as OpenAI CEO, and for the company to transfer around$180 billion to its charitable arm. If even one of these is granted, that could really upend OpenAI as it is today. For OpenAI, the stakes are very high. Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza. It's Friday, May 15th.

2:30Coming up on the show, the blockbuster AI trial of the century. www.painfulthoughts.com

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3:49The roots of this lawsuit go back to OpenAI's origins. The company was founded in 2015, and its goal was to build technology for the good of humanity. OpenAI was started as a nonprofit so that no one entity, no one person, no one company would control very powerful technology. Sam Altman, Elon Musk, and the other founders wanted to create AI that was safe so that it didn't, you know, destroy all humankind. They also wanted to be driven by their ideas, not by shareholders and profit. To help get the project off the ground, they got donations from several tech players, including$38 million from Elon Musk.

4:34But it wasn't enough, because it turns out that building AI is really, really expensive. Companies need billions for the computing power to train models and make them better. OpenAI's leaders came to feel that, as a nonprofit, the company simply wouldn't be able to raise enough to fund their ambitions. So they restructured into a for-profit. That let them start bringing in investments, though the company still has a nonprofit parent. With the for-profit conversion, you've now got a CEO who's got shareholders to answer to. These shareholders are going to expect a for-profit company to make money.

5:12The incentives have completely shifted, is what some people would argue. Since then, OpenAI has grown exponentially. It's formed a partnership with Microsoft, and the company's latest valuation puts it at over$800 billion. Meanwhile, Musk's relationship with the company had started to deteriorate. Musk left OpenAI's board in 2018 and later founded his own AI company, XAI. He's also become publicly critical of both OpenAI and Altman. Here's Musk on CNBC. I mean, this would be like, let's say you funded an organization to save the Amazon rainforest, and instead they became a lumber company and chopped down the forest and sold it for money.

5:57And you'd be therefore like, well, wait a second, that's the exact opposite of what I gave the money for. Musk took his disagreement with OpenAI one step further, when, in 2024, he filed a lawsuit against OpenAI, Altman, and the company's president, Greg Brockman. Elon Musk suing OpenAI and the company CEO, Sam Altman, alleging they have breached the company's founding agreement. Musk is accusing the chat GPT maker of putting profits ahead of its original promise, which was to do good for the public. It took a while for the suit to get to trial, but it finally started a few weeks ago, at the end of April.

6:36Inside the courtroom, can you start by telling us about the judge? Who is the judge for this trial? The judge is Yvonne Gonzalez-Rogers. She has presided in a lot of really important cases that have had a lot of ramifications for Silicon Valley. And she has a reputation for being a real no-nonsense judge. — And she lived up to that reputation almost right away. On the day of opening arguments, she reprimanded Musk for posting about the trial on social media and called him up to the podium. — So she had, you know, the richest man in the world step up to the courtroom and basically look up at her.

7:20And she basically said, you know, your posting on X is causing me trouble. You know, maybe you've never done this before, but let's see if you can actually stop posting on X for once in your life, was the tone that she had. And, you know, this is her courtroom. So Musk had to say, yes, I'll stop posting.

7:47Okay, now let's get into the two sides of this trial, starting with Musk's side. What was the argument that his lawyers made? Musk's lawyers are essentially saying that Sam and Greg were not truthful about their intentions when they created OpenAI. And that as Elon was giving tens of millions of dollars to OpenAI, Sam and Greg's intentions were to turn into a for-profit and make a lot of money from it. One of the most striking pieces of evidence that Musk's team presented was the personal journal of OpenAI's president, Greg Brockman. With Greg, Musk's lawyers have pointed to some private journal entries that he had written during that time when they were negotiating the for-profit conversion to basically show the jurors, look, Greg has always just been in this for the money.

8:46He didn't care about the mission. Excerpts from Brockman's journal, which were written in a kind of shorthand, were displayed on large video screens, big enough for the whole courtroom to see. And while OpenAI lawyers referred to Brockman's journal, Musk's lawyers repeatedly called it a diary, as in, quote, let me go back to your diary, your journal, excuse me. In one journal entry, he wrote, financially, what will take me to one billion? Hmm. Like he already had an interest in making money at the time. Exactly. Right. And so Musk's lawyers, they really made the most out of these diary entries for their argument.

9:28And, you know, Stephen Mollo, litigator for Musk, he brought up that particular passage, financially, what will take me to one billion? And then he asked Brockman when he was on the witness stand, what you really wanted was to be a billionaire, right? What did he say? Greg afterwards said, solving for the mission has always been my primary motivation, and it remains so today. Musk's team pointed to another entry from Brockman's journal where he wrote about turning open AI into a for-profit and what it would mean for Musk. It reads, quote, it'd be wrong to steal the nonprofit from him. And also, quote, that'd be pretty morally bankrupt, and he's not really an idiot.

10:12And so what was the point of showing the journal, ultimately? Like, what were Musk's lawyers trying to say about Brockman? To basically show the jurors, look, Greg has always just been in this for the money. He didn't care about the mission. How unusual is that as a piece of evidence in a trial like this? Very unusual. The way that Greg has described it is that this was never meant for public consumption. And Tia described it as his stream of consciousness, that there are things that he wrote that maybe he didn't really mean. It was just a passing thought. But now it's been put up for evidence.

10:57When one OpenAI board member was on the stand, the judge asked about what's more important, the fiduciary duty to the for-profit or the mission of the nonprofit? And the board member said the mission always takes precedence. Over the course of the trial, a number of other big Silicon Valley names testified, like Satya Nadella, the CEO of Microsoft, Ilya Sutskova, another co-founder of OpenAI, and Siobhan Zilis, a former OpenAI board member and Musk's current romantic partner. And there was Elon Musk himself, who was on the stand for three days. At one point, he said, quote, I was a fool who provided them free funding to create a startup.

11:40Then, as the trial moved into its third week, all eyes turned to one of the final witnesses, Sam Altman. That's after the break.

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13:00On the other side, what are OpenAI's lawyers arguing in the company's defense? OpenAI's lawyers have argued that Elon is for the for-profit conversion. Not only was Elon for the for-profit conversion, he actually wanted majority control of it. And that when the OpenAI co-founders said no to that request, Elon cut off funding, went on to start his own AI company. And that this lawsuit is the quote-unquote latest variant of Elon's efforts to basically slow open AI down for his own AI company. So painting him almost as this sort of vindictive person. Yeah, exactly. They pointed to a number of emails and text messages that pointed to Musk's approval of the for-profit conversion.

13:49What was Musk's defense against that? Yeah, so Musk's defense was that, yeah, I was for a for-profit conversion at one point because I understood that they needed more financing. I just don't agree with how they went about it. OpenAI's lawyer said that no promises were made to Musk that OpenAI would remain a nonprofit organization. He said, quote, the only person who claims to have heard these promises is Mr. Musk himself. On Tuesday morning, OpenAI's lawyers called their star witness, Sam Altman. He walked into the courtroom wearing a sharp suit and lavender tie. Can we take a moment here? What was it like when he got up there?

14:37How did he seem? I thought he kept a pretty calm demeanor throughout the entire time at the trial, actually. I mean, Sam was actually in the courtroom for most of the days during this trial. but Tuesday was his first day actually on the witness stand. Part of the Musk team's courtroom strategy was to prove that Altman was untrustworthy, that he had lied to the company's board a number of times, and that he prioritized profit over the company's original mission. If they can prove to the jurors that this is an untrustworthy person, then they can make the case that Sam had ill intent all along. And so while a lot of these accusations of Sam lying didn't necessarily pertain to, you know, the for-profit conversion, it still paints this picture of Sam being a liar.

15:30Altman's lawyers wanted him to show that wasn't true and to make that case directly to the jurors. So walk us through this. What happened when he testified? He talked about his upbringing, how he got into the tech industry. He talked about how he helped start OpenAI. And at some point during his testimony, the infamous blip came up. Development rocking the tech world, the unexpected firing of OpenAI CEO Sam Altman. The blip was the short period of time when Sam was ousted as CEO and then he came back. Exactly. The board says it pushed Altman out after a review found he was, quote, not consistently candid in his communications with the board.

16:16OpenAI posting on X that Sam Altman will now officially return as CEO. That was, I think, an important moment in Sam's testimony because it was his time to tell the jurors his perspective of the events that happened. And as we all know now, the board then felt the need to push Sam out because they said that he hadn't been honest with them about a number of things. And, you know, Sam, he said, you know, there was clearly a misunderstanding and there was clearly a breach of trust. And I apologize for that. And then Musk's lawyer, Stephen Molo, took his turn questioning Altman. The cross-examination had a very fiery start.

17:03So the first question that Musk's litigator asked him was, are you completely trustworthy? And Sam said, I believe so. And Molo said, but you don't know whether you're completely trustworthy. So that was really how the cross-examination started. Set the tone. It really set the tone. And shortly after that, Molo brought up specific testimonies that actually came up during the trial. Sam would say, oh, I didn't watch that deposition. I didn't listen to that testimony. And at a certain point, Molo said, you know, are you even paying attention in this trial? Like, do you even care about this trial?

17:42And Sam had a very long pause, long pause. And then he said, you know, of course I care, but I'm also running a very important company. Sam's legal team, you know, they very much called this cross-examination a character assassination. That's how they described it in a press conference after Sam's testimony.

18:10The trial wrapped up yesterday with closing arguments. OpenAI's lawyer said Musk was aware of the plan to convert the company from a nonprofit to a for-profit and only soured on the idea once it became clear he couldn't fully control it. Musk's lawyer ended his arguments by reiterating that Sam Altman was a liar and that OpenAI's leadership had been deceptive. The jury is set to begin deliberations on Monday. If they decide against OpenAI, then the judge will decide what happens next, whether to give Musk any of the remedies he asked for in the original suit. Elon has asked to remove Sam as CEO and Greg as president.

18:48So it could mean OpenAI potentially losing two of its prime leaders. Another remedy that Elon is asking is for$180 billion to be paid out from OpenAI's for-profit entity into its nonprofit parent. There's also the potential that OpenAI would have to change its company structure. That could mean big trouble for OpenAI, which is planning to go public later this year. Being able to finance the type of data infrastructure is very, very expensive. And$180 billion would be a huge loss for OpenAI. I mean, that's the maximum amount, but any billion in loss is a huge loss for companies like these. And the company's trying to go public this year, so this kind of a financial loss would seriously slow the company down.

19:44What if OpenAI wins? What if OpenAI wins? If OpenAI wins, then, you know, all goes according to plan. There are a lot of people who are anticipating the company's IPO. So that timeline will be cemented. And Sam will live another day as CEO of OpenAI. In other words, if the verdict goes to OpenAI, things mostly stay the same for the company. But there's now a question of whether there will be real reputational damage. and if it will stick. What does this mean for the AI sector beyond just open AI and Musk? Yeah, I think it raises some serious questions around governance. It's been really interesting to watch these very powerful people in AI to see how they actually do deals and the consequences of their deal-making.

20:41And it brings into question, I guess like who we actually want to lead these AI companies because neither side has painted the other leader of the next frontier of technology in a very positive light. So I think it brings up a lot of questions about all these people who are leading the most powerful tech companies in the world. How do we hold them accountable? Do we get a say in who leads these companies, is this trial potentially the only way for, you know, nine very ordinary Americans who are serving as jurors to potentially have a say in who leads the most powerful AI company in the world?

21:33News Corp, the owner of The Wall Street Journal, has a content licensing partnership with OpenAI. That's all for today, Friday, May 15th. Additional reporting in this episode by Ben Cohen, Keach Hagee, and Becky Peterson. The Journal is a co-production of Spotify and The Wall Street Journal. The show is made by Laura Benshoff, Catherine Brewer, Evelyn Fajardo-Alvarez, Pia Gudkari, Max Green, Sophie Codner, Mac Kwong, Colin McNulty, Laura Morris, Enrique Perez de la Rosa, Sarah Platt, Alan Rodriguez -Espinosa, Heather Rogers, Pierce Singhi, Jeeva Kavirma, Catherine Whelan, Tatiana Zamis, and me, Jessica Mendoza.

22:14Our engineers are Griffin Tanner, Nathan Singapok, and Peter Leonard. Our theme music is by So Wiley. Additional music this week from Catherine Anderson, Peter Leonard, Emma Munger, Nathan Singapok, Griffin Tanner, and Blue Dot Sessions. Fact-checking this week by Mary Mathis.

22:35Thanks for listening. See you on Monday.

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