Elon Musk's legal team has filed a motion for a preliminary injunction against OpenAI, its co-founders, and Microsoft, alleging that the defendants are engaging in anticompetitive behavior that harms his own AI company, xAI. The filing, submitted to the U.S. District Court for the Northern District of California, accuses OpenAI and its affiliates of discouraging investors from backing xAI, misusing competitively sensitive information, and converting OpenAI's governance structure to a for-profit entity.

The lawsuit, initially filed and then withdrawn in July, was revived in late summer with new defendants added, including Microsoft, LinkedIn co-founder Reid Hoffman, and former OpenAI board member Dee Templeton. Musk's attorneys argue that OpenAI's actions will cause "irreparable harm" if the injunction is not granted, and that the company's nonprofit character must be preserved.

The allegations against OpenAI include claims that the company is depriving xAI of capital by extracting promises from investors not to fund xAI or its competitors. In October, the Financial Times reported that OpenAI demanded investors in its latest funding round abstain from also funding any of OpenAI's rivals, including xAI. Musk's counsel asserts that at least one major investor in OpenAI's October funding round has subsequently declined to invest in xAI.

Notably, xAI has reportedly closed a $5 billion funding round this month with participation from prominent investors, including Andreessen Horowitz and Fidelity, bringing its total funding to around $11 billion. Despite this, Musk's attorneys argue that OpenAI's actions are harming marketplace competition.

The motion for an injunction also alleges that Microsoft and OpenAI continue to illegally share proprietary information and resources. Specifically, the filing notes that OpenAI selected Stripe, a payment platform in which OpenAI CEO Sam Altman has "material financial interests," as OpenAI's payment processor. Altman is said to have made billions from his Stripe holdings.

Microsoft, which invested $13 billion in OpenAI last year, is accused of facilitating agreements between Microsoft and OpenAI that would violate antitrust rules. The filing also points to Reid Hoffman's position on the boards of both Microsoft and OpenAI, as well as his role as a partner at investment firm Greylock, as evidence of his privileged view into the companies' dealings.

Musk's attorneys argue that if an injunction is not granted, OpenAI might "lack sufficient funds" to pay damages were the court to eventually rule in Musk's favor. They also claim that were a judge to disallow OpenAI's nonprofit transition, it would be "virtually impossible" to "unwind" the company's transactions without "widespread investor loss" should OpenAI continue to accept new investments.

OpenAI has sought to dismiss Musk's lawsuit, calling it "blusterous" and baseless. The company has not yet responded to requests for comment on the latest developments. As the legal battle unfolds, the tech industry will be watching closely to see how the court rules on Musk's allegations of anticompetitive behavior.

The implications of this lawsuit extend beyond the immediate parties involved, as it raises important questions about the governance and oversight of AI companies. As AI technology continues to advance and play an increasingly prominent role in our lives, it is crucial that these companies operate in a fair and transparent manner, free from anticompetitive practices that could stifle innovation and harm consumers.