May 12, 2025, 15:09 IST /5 min read Why are Musk and Altman rivals? Tesla CEO Elon Musk co-founded OpenAI in 2015 alongside Sam Altman, Greg Brockman, and others with the shared mission of developing artificial general intelligence (AGI) for the benefit of humanity. Musk was a major financial backer in the early days but stepped away from the organisation in 2018, reportedly over conflicts of interest and internal disagreements on direction and control. In 2019, OpenAI transitioned to a “capped-profit” structure to attract external funding while maintaining its core mission. This change paved the way for Microsoft’s initial $1 billion investment. By 2023, the partnership deepened into a multi-year, multi-billion-dollar deal, with Microsoft investing $14 billion in total. Microsoft secured a 49% stake in OpenAI’s for-profit subsidiary and gained exclusive rights to commercialize its technologies. OpenAI’s leadership defended the structural shift as necessary to compete with tech giants like Google and to prevent monopolisation of AI technology. However, Musk criticised the move, arguing that OpenAI had strayed from its original non-profit mission and had effectively become a “closed-source, maximum-profit company” under Microsoft’s control. In March 2024, Musk filed a lawsuit against OpenAI, alleging breach of its founding principles and accusing the company of operating as a de facto subsidiary of Microsoft. OpenAI responded by claiming Musk had previously sought “absolute control” of the organisation before his departure and even attempted to merge OpenAI with Tesla. The company dismissed the lawsuit as a publicity stunt designed to harass a competitor, releasing internal emails to support its counterclaims. Although the lawsuit was dropped in June 2024, Musk refiled it in August as a federal case. This time, the complaint expanded to include accusations of “rampant self-dealing” by Sam Altman, anticompetitive practices, and alleged coordination between Microsoft and OpenAI to suppress competition. Musk’s legal team claimed that both companies exchanged sensitive information and pressured investors to avoid funding rival ventures such as his own AI company, xAI. Meanwhile, both OpenAI and xAI raised substantial funding from global investors, particularly sovereign wealth funds in the Middle East. OpenAI secured $6.6 billion in October 2024, and xAI raised up to $6 billion in November at a valuation of $50 billion, making it the sixth most valuable startup in the world. Much of this capital was reportedly allocated for purchasing 100,000 Nvidia AI chips to scale their respective AI infrastructure. Musk launched xAI in 2023 as a direct competitor to OpenAI, introducing the chatbot Grok to rival ChatGPT. He has consistently criticised OpenAI since ChatGPT's public debut in late 2022, focusing his attacks on its commercialisation and relationship with Microsoft. Alongside his lawsuits, Musk has worked to position xAI as a more transparent and safety-conscious alternative in the rapidly evolving AI industry. Despite earlier attempts to downplay Musk’s criticisms, OpenAI has faced increasing scrutiny in recent months—from AI researchers, former employees, and several state attorneys general. Under growing pressure, the company announced a new governance change in 2025. While it will continue spinning off its for-profit arm into a public benefit corporation (PBC), OpenAI confirmed that its nonprofit board will retain final control—an apparent concession to calls for greater oversight and alignment with its founding mission. Related Tags