US antitrust regulators have reportedly backed part of Elon Musk‘s argument in his legal battle to prevent OpenAI from restructuring as a for-profit company. According to a report by Bloomberg, in a court filing, the Justice Department and the Federal Trade Commission (FTC) argued that overlapping board memberships can negatively impact competition, even after a director resigns. This aligns with Musk’s lawsuit, which alleges antitrust violations by OpenAI and Microsoft due to LinkedIn co-founder Reid Hoffman simultaneously serving on both companies’ boards from 2017 to 2023, and Deannah Templeton’s brief stint as a Microsoft executive and non-voting OpenAI board member.
The agencies stated reportedly that a company that ceases potentially illegal behavior still bears a “heavy burden” to prove the behavior won’t recur. While the agencies didn’t take a stance on the legality of OpenAI’s restructuring itself, their filing supports Musk’s argument about the potential harm of overlapping directorships.
The filing comes in response to Musk’s recent request that a federal court stop the company from pursuing what he called an “illegal” conversion to a for-profit company. A hearing on this request is scheduled for January 14.
Elon Musk vs Sam Altman
This legal action is part of Musk’s ongoing tussle with OpenAI CEO Sam Altman, years after they co-founded OpenAI as a non-profit focused on developing AI for societal benefit.
The FTC has been investigating OpenAI on multiple fronts, including a soon-to-be-released study on AI investments by Microsoft and other tech companies, potential misleading consumer practices by OpenAI, and the board overlaps involving Hoffman. Hoffman has publicly criticized FTC Chair Lina Khan, calling for her removal.
Musk initially sued OpenAI in state court, then dropped and refiled the case in federal court. He claims OpenAI breached its original non-profit mission by accepting billions in funding from Microsoft starting in 2019 and argues that immediate court intervention is necessary to prevent OpenAI from dominating the AI market.
OpenAI, which declined to comment on the latest filing, has previously defended the legality of Hoffman and Templeton’s board positions and dismissed Musk’s lawsuit as baseless, claiming he initially supported a more traditional corporate structure for the company.
