Musk admitted in court that he made a mistake in investing $38 million in OpenAI, while some evidence from the AI ​​company suggests the complete opposite.

Elon Musk appeared in court to testify. Photo: New York Times .

On the second day of the trial in Oakland, Elon Musk continued to testify and admitted to what he called his biggest mistake with OpenAI.

“I was stupid to give them free funding to start a startup . I gave them $38 million , basically free funding, to create what would later become an $800 billion company ,” Musk said in response to a question from lawyer Steven Molo.

Musk described 2018 as the seed of today’s legal battle. At the time, he was very busy with Tesla and SpaceX’s manufacturing operations. The billionaire admitted he “didn’t even have time to attend OpenAI’s board meetings.” When they considered merging the for-profit company into its structure, Musk said he wasn’t against it but wanted the non-profit organization to retain control.

Evidence against Elon Musk

Musk said he started to get really worried when Microsoft announced a $10 billion investment in OpenAI in early 2023, after ChatGPT became a global phenomenon. He texted Altman asking “what the hell is going on?” and called the investment a “scam.”

“Essentially, they turned a non-profit organization into a $20 billion company . Frankly, I felt it was a bribe,” Musk said. After Microsoft invested, Altman offered Musk a stake in the company, but he declined.

William Savitt, OpenAI’s lawyer, claims Elon Musk is presenting false evidence. Photo: New York Times .

On the other side of the courtroom, William Savitt, OpenAI’s lawyer, began his counter-argument with email evidence. Savitt presented emails from 2017 showing that when OpenAI was considering transitioning to a for-profit model, Musk himself wanted to hold a majority stake and full control, including the right to choose a majority of the board members.

Savitt also presented other old emails in which the Tesla CEO promised the OpenAI founders that he would establish a for-profit company under his control.

The exchange between Musk and Savitt became heated. Musk called Savitt’s questions “defineably confusing” and designed to mislead. Meanwhile, OpenAI’s defense lawyers pointed out inconsistencies in Musk’s testimony, specifically his failure to specify the amount invested.

Complex relationship

Savitt’s relationship with Musk has a complicated history. Savitt previously represented Musk and Tesla in a securities fraud lawsuit related to the SolarCity acquisition. He then represented Twitter against the Tesla CEO when the billionaire attempted to withdraw from the social media acquisition in 2022. After the South African billionaire completed the acquisition and renamed the company X, the company sued Savitt’s law firm, alleging “unjust enrichment” from a $90 million profit .

Savitt also implied that Musk’s lawsuit was merely an attempt to delay OpenAI while his engineers developed Grok at xAI.

Elon Musk could derail OpenAI’s IPO plans. Photo: AFP .

The trial is not just a personal battle between two people. Its outcome could reshape the entire AI industry. If Musk wins and the court forces OpenAI back to a non-profit model, the AI ​​giant’s IPO plans will collapse. The funding OpenAI needs to keep up the race with Google, Anthropic, and its Chinese rivals will be cut off.

Conversely, if OpenAI wins, it would signal that technology nonprofits can absolutely transition to a for-profit model without violating their original obligations, paving the way for many other AI startups to follow suit.

With a valuation of over $300 billion and serving more than 900 million users weekly, the lawsuit between Elon Musk and OpenAI is one of the most influential trials for the future of technology since the Microsoft antitrust case in 2001.