OpenAI has filed a lawsuit against Elon Musk. Further, they claim that he has used bad-faith and dilatory tactics to block their project for his own selfish ends. The lawsuit comes at a time of intense rivalry between OpenAI and Elon Musk’s new AI venture, xAI. As OpenAI maintains its clear lead over the field, xAI mostly flounders in catching up to its older, richer rival.
xAI, founded by Musk, most recently purchased the social media network X, formerly known as Twitter. In this fast changing AI landscape, it has to date fallen short of OpenAI. Sam Altman, OpenAI’s chief executive, recently rejected an unsolicited offer by Elon Musk to purchase the company. That proposed merger, valued at $97.4 billion, occurred earlier this year. In response to Musk’s overture, Altman stated, “no thank you but we will buy Twitter for $9.74 billion if you want.”
Tensions between the two parties became strained after Musk accused OpenAI of not putting the mission first. This charge led to a dramatic clash between the two contenders. Since none of us are claiming credit for the other’s actions, a bad faith actor is not helping their well-funded cause. The company remarked, “Elon’s nonstop actions against us are just bad-faith tactics to slow down OpenAI and seize control of the leading AI innovations for his personal benefit.” They asserted, “Elon’s never been about the mission. He’s always been about his own agenda.”
After causing a flurry of excitement in February with the news of his bid for OpenAI, Elon Musk was simultaneously putting his ownership of X into stone. This unsolicited offer was highly unusual and caused a stir in the tech world, especially since Musk co-founded OpenAI with Altman. His exit from the group many years ago has left many wondering what his true motives are for the organization today.
The President’s directive has certainly made the legal battle much more interesting. U.S. District Judge Yvonne Gonzalez Rogers rejected Musk’s request for an injunction to prevent OpenAI from releasing their chatbot. Potentially complicating these efforts, a federal judge in Oakland, California recently scheduled a March 2026 trial date over the continued suit.
Musk claims that the new combined entity of xAI Holdings is already worth over $100 billion. This claim illustrates Kashkari’s long-term goal in the AI space. Even though xAI is now a somewhat third-party challenger, that’s where he wants to be at the head of the pack.
As this legal drama plays out, both companies will continue to undergo a microscope. Their approaches and the long-term effect of their competition will play a central role in shaping the future of AI technology.