Hello and welcome to Eye on AI…In this edition: Sparks fly as Musk and Brockman testify in battle over OpenAI’s restructuring…the White House does a 180 degree U-turn on AI regulation and may begin reviewing AI models prior to release…OpenAI and Anthropic both target PE-backed companies with new joint ventures…a breakthrough in a foundation model for robotics…AI scientists may still be a ways off.
People in Silicon Valley and far beyond have been enthralled by the drama playing out in a courtroom in Oakland, California, where a jury is currently hearing testimony in Elon Musk’s lawsuit against OpenAI cofounders Sam Altman and Greg Brockman. The judge and jurors in the case (the jury’s verdict is merely advisory) will need to decide whether Altman’s and Brockman’s communications with Musk around the formation of OpenAI established a formal “charitable trust” and whether Altman and Brockman subsequently violated that trust when they restructured OpenAI so that its non-profit board no longer had sole control over its for-profit arm. They will also have to decide on Musk’s allegations that Altman and Brockman unjustly enriched themselves as OpenAI re-oriented from a research-oriented lab to being primarily a commercial entity.Most legal analysts say Musk’s case is weak and that he’s likely to lose. In fact, I’m surprised the case has even come to trial. I thought that Musk would opt to settle at the last minute. I had long-assumed that this was one of those legal cases where the lawsuit itself was the whole point, not whether Musk ultimately prevailed. I thought his intention was two-fold: 1) to sow enough investor doubt about the viability of OpenAI’s new for-profit company structure to make it harder for OpenAI to raise further investment and possibly go for an IPO and 2) to use the discovery process to surface lots of embarrassing emails, internal documents, and details about Altman, Brockman, and the constant drama at OpenAI that would tarnish the reputation of his former cofounders.
Has Musk’s lawsuit already accomplished what he wanted?
So far, it’s not clear the litigation has had much impact on OpenAI’s ability to continue to raise money. It has held several successful funding rounds since Musk filed his suit, including an additional $122 billion fundraise at a $852 billion valuation that closed in March. An IPO still appears to be on the cards—and to the extent that it is looking shaky, it has nothing to do with Musk’s lawsuit.But plenty of documents have emerged that paint Altman and Brockman in a less than flattering light and those documents have helped feed lots of media coverage about internal strife at OpenAI. So you might think Musk would say: blows landed, mission accomplished, time to cut bait. Yet Musk apparently thought there was more potential to damage that could be done by going to trial. We know this because Musk said so explicitly in an email to Brockman on the eve of the trial—an email that OpenAI’s lawyers made public on Sunday and tried, unsuccessfully, to have admitted into evidence.According to OpenAI’s lawyers, Musk reached out to Brockman about discussing a settlement of the case in the week before the trial. Brockman suggested that both sides drop their respective claims (OpenAI has counter-sued Musk claiming harassment.) Musk wrote back that “By the end of this week, you and Sam will be the most hated men in America. If you insist, so it will be.”
The email was a spectacular moment in a trial that has, so far, resulted in few bombshell revelations on the witness stand. That’s because much of the sensational stuff has already been disclosed in the documents that surfaced through the pre-trial discovery process. Hearing those details repeated on the stand doesn’t change the public narrative much.
A few fireworks from both Musk and Brockman
There have been a couple of wowzer moments though: One was Musk’s admission that his AI company, xAI, had trained its Grok model in part by ‘distilling’ OpenAI’s GPT models. Distillation is the process of training a model on the answers from another model. This tactic violates OpenAI’s terms of service, so it is likely that this was done using fake or fraudulent OpenAI accounts, and Musk’s admission to this conduct was something of a bombshell. Musk’s excuse was essentially “everyone does it.”
The other startling moments so far came in Monday’s testimony from Brockman, which included a number of potentially damaging moments. Brockman acknowledged he never followed through on his own initial pledge to donate $100,000 to OpenAI’s non-profit when it was set up, but now has a stake in the for-profit company worth $30 billion. Musk’s lawyers also questioned Brockman about his own journal entries from November 2017 in which he wrote about being “warm to steal the nonprofit from [Musk] to convert to b corp without him.” He also wrote, “[Musk’s] story will correctly be that we weren’t honest with him in the end about still wanting to do for profit just without him.” Brockman’s words may prove damning, since they seem to confirm some of the key allegations Musk makes in his suit. So too may be Brockman’s admission that he was an investor in the AI chip startup Cerebras at the time OpenAI was discussing a potential acquisition of the company and that he never disclosed his investment to Musk. Altman was also a Cerebras investor. That may help Musk’s attorneys make the case for unjust enrichment although the merger proposal did not go ahead. (OpenAI did later sign a major partnership with Cerebras that significantly boosted the chip startup’s valuation.)
Still, it’s far from certain Musk will prevail, either legally, or in shifting public opinion against his one-time-cofounders-turned-bitter-rivals, Brockman and Altman. In many ways, the trial is a distraction, generating much more heat than it is shedding light on the bigger concerns about who controls AI and the risks the technology presents. While the Musk-OpenAI courtroom showdown has been billed as the first great technology trial of the AI era, a legal showdown that matters far more will take place two weeks from now in a courtroom in Washington, D.C. That’s when a federal appeals court panel will hear arguments in Anthropic’s challenge to the ‘supply chain risk’ designation the Trump Administration slapped on it for refusing to agree to its specified contract terms for providing its AI models to the U.S. military. That’s a case with huge implications not just for Anthropic and the fate of the AI industry, but also for the balance of power between the state and industry more generally.
Even as that case moves forward, the ground is shifting in D.C. Anthropic’s Mythos model, with its powerful cyber capabilities, combined with growing public fears about AI technology, seem to have convinced the Trump administration to perform a head-spinning U-turn: moving from a highly-laissez faire approach to AI to a mandate that the government receive early access to AI models and essentially license their release to the wider public. (More on that in the news section below.) This policy reversal may not have the drama of a trial, but it matters far more for the shape of AI development.
Ok, with that, here’s this week’s AI news.
Jeremy [email protected]@jeremyakahn
But before we get to the news: Do you want to learn more about how AI is likely to reshape your industry? Do you want to hear insights from some of tech’s savviest executives and mingle with some of the best investors, thinkers, and builders in Silicon Valley and beyond? Do you like fly fishing or hiking? Well, then come join me and my fellow Fortune Tech co-chairs in Aspen, Colo., for Fortune Brainstorm Tech, the year’s best technology conference. And this year will be even more special because we are celebrating the 25th anniversary of the conference’s founding. We will hear from CEOs such as Carol Tomé from UPS, Snowflake CEO Sridhar Ramaswamy, Anduril CEO Brian Schimpf, Yahoo! CEO Jim Lanzone, and many more. There are AI aces like Boris Cherny, who heads Claude Code at Anthropic, and Sara Hooker, who is cofounder and CEO of Adaption Labs. And there are tech luminaries such as Steve Case and Meg Whitman. And you, of course! Apply to attend here.
This story was originally featured on Fortune.com
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