Musk and Altman trial begins with 2 tech titans at war

Elon Musk and Sam Altman are facing off in a California federal court this week in a high-stakes trial that could dismantle OpenAI's $852 billion for-profit enterprise and reshape the AI industry's competitive landscape. The trial, which began with jury selection on Monday, pits two of Silicon Valley's most powerful figures against each other in a conflict stemming from OpenAI's transformation from an altruistic non-profit to a commercial juggernaut partnered with Microsoft.

"This lawsuit has always been a baseless and jealous bid to derail a competitor," OpenAI said in a statement, framing the legal action as an attempt by Musk to boost his own AI company, xAI.

Jury selection began Monday in Oakland, with the court seeking nine jurors to decide the case. Musk, who invested approximately $38 million in OpenAI's formative years, alleges the company and its leaders abandoned their founding mission to develop AI for the benefit of humanity. He is asking the court to force OpenAI to revert to a non-profit structure and is seeking up to $150 billion in damages for the non-profit arm, primarily from OpenAI's for-profit operations and its key partner, Microsoft.

A victory for Musk could invalidate the 2019 restructuring that brought in a reported $13 billion investment from Microsoft in exchange for a 27% stake. Such a ruling would throw OpenAI's rumored IPO into chaos and create a significant opening for rivals, including Musk's own Grok chatbot developer, xAI, which is reportedly pursuing its own public offering. Prediction markets on Kalshi have put the odds of a Musk victory at nearly 45%.

A 'Hindenberg Landing on the Titanic'

The trial promises a level of drama rarely seen in corporate litigation. "We're about to witness the landing of the Hindenberg on the deck of the Titanic," corporate litigation lawyer Andrew Staltman told the Washington Post, predicting a "crazy and nasty" affair. The proceedings are expected to expose the personal animosity and complex relationships behind the public-facing personas of the tech elite.

The case is deeply personal, with Musk suing Altman and OpenAI President Greg Brockman directly, rather than just the company. The core claims proceeding to trial are breach of charitable trust and unjust enrichment, after Musk's lawyers dropped several fraud-related counts to "streamline the case."

From Burning Man to the Boardroom

Pre-trial filings have already unearthed a trove of revealing communications. Court documents detail attempts by Altman's lawyers to question Musk's memory of key negotiations, suggesting his attendance at the 2017 Burning Man festival may have been a factor. While Judge Yvonne Gonzalez Rogers ruled that direct questions about Musk's alleged ketamine use would be "unduly prejudicial," she is allowing his attendance at the festival to be examined as it relates to the attention he paid to OpenAI's restructuring.

The trial is also set to feature testimony from Shivon Zilis, an AI expert who is the mother of four of Musk's children and a former OpenAI board member. In a 2018 text exchange, Zilis asked Musk if she should "stay close and friendly to OpenAI to keep info flowing," to which Musk replied, "close and friendly." The judge has deemed their relationship "highly relevant to Zilis' credibility," and Zilis stated in a deposition that their relationship is currently romantic.

'Jeff is a tool': Silicon Valley High School

The evidence paints a picture of Silicon Valley operating like a high school cafeteria, with decisions worth billions of dollars influenced by personal slights. In a 2016 email discussing whether to use Microsoft or Amazon for cloud computing, Musk wrote, "I think Jeff [Bezos] is a bit of a tool and Satya [Nadella] is not, so I slightly prefer Microsoft."

The raw emotion behind the fallout is captured in a 2023 text from Altman to Musk: "it really fucking hurts when you publicly attack OpenAI... you're my hero." Musk apologized but justified his actions by declaring, "the fate of civilization is at stake." That sentiment guarantees a dramatic courtroom confrontation between the two former allies.

This article is for informational purposes only and does not constitute investment advice.