OpenAI urges state AGs to investigate Musk for anti-competitive behavior

OpenAI's decision to ask two state attorneys general to investigate Elon Musk is a striking escalation that inverts the typical dynamic of this dispute. For over two years, OpenAI has been the defendant — fending off Musk's claims that it betrayed its founding mission by pursuing profit. Now, with jury selection just three weeks away, OpenAI is attempting to reframe the narrative: Musk is not a wronged co-founder but an anti-competitive actor using litigation as a weapon to hobble a rival to his own AI company, xAI.

The timing is clearly strategic. By sending the letters on April 6 — with jury selection on April 27 — OpenAI ensures maximum pre-trial media coverage of its counter-narrative. The letters also serve a secondary purpose: pressuring the AGs to scrutinize Musk's motives rather than OpenAI's restructuring. Jason Kwon's pointed suggestion that the AGs' offices 'merely relied on promises about what OpenAI will do in the future' is notable because it simultaneously criticizes the regulators' prior review while inviting them to redirect their attention toward Musk. Whether the AGs actually open investigations is almost secondary to the public framing effect.

Perhaps the most explosive element of OpenAI's letters is the allegation, drawn from a New Yorker report, that Musk hired investigators to conduct opposition research on Sam Altman. The claimed activities — tracking Altman's flights and movements, and circulating false allegations of sexual misconduct — move the dispute from the realm of corporate litigation into something far more personal and potentially criminal.

If substantiated, these allegations would significantly damage Musk's public position heading into trial. A jury weighing whether Musk is a principled co-founder fighting for a nonprofit's mission would view that narrative very differently if confronted with evidence of hired investigators and fabricated smear campaigns. OpenAI appears to be laying the groundwork to introduce this material at trial, using the AG letters as a vehicle to give the allegations official weight. The question is whether Musk's legal team can successfully argue these claims are irrelevant to the core contractual and fiduciary duty questions at the heart of the case.

One of the most revealing data points in this dispute is the chasm between what Musk is seeking and what legal analysts believe he could actually recover. Musk's damages claim of $79-134 billion — based on the argument that OpenAI's nonprofit foundation should be compensated for the full value of what was allegedly taken from it — would, as OpenAI notes, 'effectively cripple the organization.' By contrast, Darrow Legal Analytics estimates a reasonable settlement range of approximately $20-38 million, a figure roughly 3,500 times smaller than the upper bound of Musk's claim.

This gap matters for understanding both parties' strategies. Musk's astronomical damages figure may be less about realistic recovery and more about leverage — either to force a settlement on favorable terms or to create enough legal uncertainty to slow OpenAI's restructuring and fundraising. OpenAI, meanwhile, has every incentive to publicize the Darrow estimate, as it frames Musk's lawsuit as financially unserious and therefore motivated by competitive animus rather than genuine legal injury. The fact that Musk's original donation to OpenAI was approximately $38 million — coincidentally close to the Darrow settlement estimate — further undercuts the notion that he is entitled to tens of billions in damages.

OpenAI's allegation that Musk coordinated with Mark Zuckerberg to 'attack' OpenAI — supported by references to text messages about bidding on 'OpenAI IP' — introduces a dimension that goes beyond a two-party dispute. If the world's two wealthiest technology figures were actively collaborating to acquire or dismantle a nonprofit AI lab, that raises questions about market concentration in artificial intelligence that extend well beyond this particular lawsuit.

OpenAI's Chris Lehane framed this directly: 'two of the top four wealthiest people are trying to stop a non-profit from moving forward.' This framing serves OpenAI's interest by casting its for-profit restructuring as a David-versus-Goliath story — a nonprofit trying to pursue its mission against billionaire interference. The irony, of course, is that OpenAI itself is now valued at $852 billion and backed by Nvidia and SoftBank, making the 'scrappy nonprofit' narrative increasingly difficult to sustain. Nevertheless, the Musk-Zuckerberg coordination allegation could prove potent with both regulators and jurors, particularly given broader public concern about Big Tech consolidation. The fact that Musk runs xAI, a direct OpenAI competitor, while allegedly seeking to undermine OpenAI through litigation, is the centerpiece of OpenAI's anti-competitive argument.