Federal authorities have sided with Elon Musk on a key pillar of his high-profile antitrust case against Sam Altman's OpenAI, Microsoft and billionaire Reid Hoffman, The Post has learned.
In November, Musk's lawyers added Microsoft and Hoffman as defendants in an amended civil lawsuit targeting OpenAI. The complaint alleges that OpenAI collaborated with Microsoft in an illegal effort to monopolize the AI market, violating federal antitrust laws and its own nonprofit mission.
In the amended lawsuitMusk's lawyers argue that the simultaneous positions of Hoffman and another executive, Deanna Templeton, on the boards of OpenAI and Microsoft violate the Clayton Act, which prohibits so-called “director interlocking” in which one person serves on the board. It was argued that Article 8 had been violated. Two competing companies.
In a joint statement filed in California federal court on Friday, the Federal Trade Commission and the Department of Justice, which have the authority to enforce the Clayton Act, essentially said the board's maneuvering violated the law. The lawyer said that the claim was correct.
This revokes OpenAI's license with Microsoft and forces the parties to deprive the parties of their purported “ill-gotten gains” and adhere to their original mission of developing secure AI in the public interest. This is a legal windfall for Musk, who wants OpenAI to do the same.
Musk has argued that he and the public suffered irreparable harm as a result of their actions, and that he should also be compensated for economic damages.
Regarding the director interlock issue, both agencies argued that an executive's resignation from the board is not necessarily sufficient to address potential antitrust violations under the Clayton Act, according to details in filings obtained by the newspaper.
Officials accused of violating the law face a “heavy burden” to prove that “it is absolutely clear that the alleged unlawful conduct cannot reasonably be expected to occur again,” according to the joint filing. It is said that there is.
Any attempt to argue that an official's voluntary resignation invalidates a violation of the Clayton Act would undermine federal authorities' ability to enforce the law, the filing adds.
Additionally, the FTC and the Department of Justice argue that designating officials as nonvoting committee observers rather than full members does not protect them or their companies from liability under the Clayton Act. The Fed asked the court to avoid ruling otherwise.
The Journal has reached out to the Justice Department and FTC for comment.
Mr. Hoffman, co-founder of LinkedIn, has served as an independent director on the Microsoft board since 2017. He is also a partner in technology venture company Greylock.
Mr. Hoffman, an original investor in OpenAI, joined the board in 2018 but was removed from the board in March 2023, citing concerns that investing in companies affiliated with OpenAI posed a conflict of interest. resigned.
“To be clear, OpenAI and its Board of Directors have taken great care from the beginning to monitor and avoid competition,” said Hoffman. I wrote In a LinkedIn post at the time.
Microsoft didn't invest in OpenAI until 2019, when it poured $1 billion into it. Since then, it has invested more than $13 billion.
Templeton was a long-time Microsoft executive “from approximately November 29, 2023 to July 9, 2024, until it was widely reported that she resigned amidst the FTC's re-enforcement of the Clayton Act ban. Musk served as a non-voting observer on the OpenAI board of directors, according to Musk's lawsuit.
“The purpose of the prohibition on board interlocking is to prevent competitively sensitive information from being shared in violation of antitrust laws and/or to provide a forum for coordinating other anticompetitive activities. Musk's complaint alleges.
“Allowing Templeton and Hoffman to serve as members of the board of directors of OpenAI, Inc. undermined this purpose.”
Representatives for Musk, Microsoft, OpenAI and Hoffman did not immediately respond to requests for comment.
Musk co-founded OpenAI but became a fierce rival with Altman after disagreements over the company's direction. Musk then founded xAI, which competes directly with the ChatGPT maker.
In December, Musk asked a court to block OpenAI's plans to become a for-profit organization.
“Never before has a company gone from a tax-exempt charity to a gorgon that paralyzed a $157 billion for-profit market in just eight years,” Musk's lawsuit states.
OpenAI, for its part, has said Musk's claims are baseless, and in previous filings pursuing the case, has accused him of “an increasingly blatant campaign attacking OpenAI for competitive advantage.” As part of the accusation.
