Elon Musk’s $134B OpenAI Lawsuit: Math Manipulation Alleged
▼ Summary
– Elon Musk is suing OpenAI for abandoning its nonprofit mission and is seeking damages between $79 billion and $134 billion from OpenAI and Microsoft.
– Musk’s damage estimate was calculated by an expert who claims Musk’s early contributions generated 50-75% of OpenAI’s current value, based on financial, equity, and nonmonetary factors.
– OpenAI and Microsoft were shocked by the claim and filed a motion to exclude the expert’s opinion, calling his calculations “made up” and prejudicial.
– The defendants argue the expert’s valuation is flawed, as it depends on a 2017 equity proposal for a for-profit entity that was never actually agreed upon.
– A key issue is that the expert’s math assumes a deal where Musk would control 51.2% of a proposed entity, despite Musk leaving OpenAI after disagreements over valuing his contributions.
In a high-stakes legal battle that could reshape the artificial intelligence industry, Elon Musk is pursuing a staggering sum in damages from OpenAI and Microsoft. The lawsuit alleges a fundamental betrayal of OpenAI’s founding nonprofit principles, with Musk claiming the organization effectively “made a fool out of him” as an early supporter. The financial stakes are monumental, with Musk’s legal team seeking a recovery estimated between $79 billion and $134 billion, a figure that has sent shockwaves through the tech community.
The colossal damage estimate originates from an analysis by a newly retained expert, C. Paul Wazzan. His valuation hinges on the assertion that Musk’s early involvement was responsible for generating 50 to 75 percent of OpenAI’s current value. This conclusion was derived from an assessment of four key elements: the total financial contributions Musk made before his 2018 departure, a proposed equity stake from 2017 negotiations, his current stake in his own venture xAI, and his non-monetary contributions, such as time invested and the prestige of his association.
OpenAI and Microsoft have responded with forceful legal pushback, filing a motion to exclude Wazzan’s expert testimony entirely. They argue his methodology is fundamentally flawed and risks unfairly influencing a jury. The defense contends the economist’s calculations appear “made up,” noting he testified to using novel valuation methods allegedly “conjured” specifically for this case. A central point of contention is Wazzan’s reliance on a hypothetical scenario that never materialized.
Specifically, the valuation is partly based on a 2017 proposal where Musk sought to control 51.2 percent of a for-profit entity under discussion at the time. Since OpenAI’s leadership rejected this proposed structure, the defendants argue it is illogical to calculate damages based on a deal that was never finalized. They further note that Musk’s departure followed a disagreement over how to value his contributions, a critical context they believe Wazzan’s analysis improperly ignores. Beyond the staggering compensatory claim, the companies also face the potential of punitive damages should the case proceed against them.
(Source: Ars Technica)
