By Jurica Dujmovic

Potential ramifications extend far beyond the courtroom

In a striking turn of events, Elon Musk, Tesla's (TSLA) CEO, has initiated legal action against OpenAI and its leadership, alleging that the organization he helped found has moved from its original altruistic mission toward a profit-driven approach, particularly after partnering with Microsoft (MSFT).

The lawsuit accentuates Musk's deep-seated concerns that OpenAI has deviated from its foundational manifesto of developing artificial general intelligence (AGI) for the betterment of humanity, choosing instead to prioritize financial gains. But is that really so, or is there something else at hand?

Musk was deeply involved with OpenAI since its inception in 2015, as his concerns about AI's potential risks and the vision to advance AI in a way that benefits humanity aligned with OpenAI's original ethos as a non-profit organization.

In 2018, however, Musk became disillusioned with OpenAI because, in his view, it no longer operated as a nonprofit and was building technology that took sides in political and social debates. The recent OpenAI drama that culminated with a series of significant changes in OpenAI's structure and ethos, as well as a what can only be seen as Microsoft's power grab, seems to have sparked Musk's discontent.

To understand his reasoning, it helps to remember that Microsoft is a company with a long history of litigation. Over the years, Microsoft has faced numerous high-profile legal battles related to its market practices.

Here are some prominent cases to illustrate the issue:

-- In the United States v. Microsoft Corp. case, which began in 1998, the U.S. Department of Justice accused Microsoft of holding a monopolistic position in the PC operating-systems market and taking actions to crush threats to that monopoly. In April 2000, the case resulted in a verdict that Microsoft had engaged in monopolization and attempted monopolization in violation of the Sherman Antitrust Act.

-- In Europe, Microsoft has faced significant fines for abusing its dominant market position. In 2004, the European Commission fined Microsoft 497.2 million euros, the largest sum it had ever imposed on a single company at the time??. In 2008, Microsoft was fined an additional 899 million euros for failing to comply with the 2004 antitrust order.

-- In 2013, the European Commission levied a 561 million euro fine against Microsoft for failing to comply with a 2009 settlement agreement to offer Windows users a choice of internet browsers instead of defaulting to Internet Explorer.

In light of these past litigations, it's much easier to understand why OpenAI's CEO Sam Altman's brief departure from the company and subsequent return late last year - which culminated in a significant shift in the organization's governance and its relationship with Microsoft - was the straw that likely broke Musk's back.

After Altman was reinstated, Microsoft solidified its influence over OpenAI by securing a permanent position on its board. Furthermore, the restructuring of OpenAI's board to include business-oriented members, rather than AI experts or ethicists, signaled a permanent shift in the organization's priorities and marked a pivotal turn toward a profit-driven model underpinned by corporate governance.

The consequences of this power grab are plain to see: Microsoft is already implementing various AI models designed by the company in its various products while none of the code is being released to the public. These models also include a specific political and ideological bias that makes them problematic from an ethical point of view. This too, is an issue that cannot be addressed due to the closed-source nature of AI models generated and shaped under the watchful eye of Microsoft.

Musk's own ventures, like xAI and Neuralink, suggest he's still deeply invested in the AI space, albeit in a way he has more control over, presumably to ensure that the technology develops according to his vision for the future of humanity.

On the other hand, proponents of Microsoft's partnership with OpenAI emphasize strategic and mutually-beneficial aspects. Microsoft's $1 billion investment in OpenAI is viewed as a significant step in advancing artificial-intelligence technology as it allows OpenAI to utilize Microsoft's Azure cloud services to train and run its AI software. Additionally, the collaboration is positioned as a way for Microsoft to stay competitive against other tech giants by integrating AI into its cloud services and developing more sophisticated AI models????.

Proponents say Microsoft's involvement with OpenAI is a strategic business decision aimed at promoting Azure's AI capabilities and securing a leading position in the industry. The partnership is framed as a move to democratize AI technology while ensuring AI safety, which aligns with broader industry goals of responsible and ethical AI development. It is also seen as a way for OpenAI to access necessary resources and expertise to further its research, emphasizing the collaborative nature of the partnership rather than a mere financial transaction??.

Hard truths and consequences

While many point out that Musk winning the case is extremely unlikely, it's still worth looking into potential consequences. Such a verdict could mandate that OpenAI returns to a non-profit status or open-source its technology, significantly impacting its business model, revenue generation and future collaborations. It could also affect Microsoft's investment in OpenAI, particularly if the court determines that the latter has strayed from its founding mission, influencing the tech giant's ability to protect its investment and realize expected returns.

The lawsuit's outcome might influence public and market perceptions of OpenAI and Microsoft, possibly affecting customer trust and market share, with Musk potentially seen as an advocate for ethical AI development. Additionally, the case could drive the direction of AI development, balancing between open-source and proprietary models, and possibly accelerating innovation while raising concerns about controlling and misusing advanced AI technologies.

The scrutiny from this lawsuit might lead to more cautious approaches in contractual relationships within the tech sector, focusing on partnerships and intellectual property. Furthermore, the case could draw regulatory attention, possibly leading to increased oversight or regulation of AI companies, particularly concerning transparency, data privacy and ethical considerations in AI development. While Musk's quest might seem like a longshot to some legal experts, the potential ramifications of this lawsuit extend far beyond the courtroom.

More: Here's what an AI chatbot thinks of Elon Musk's lawsuit against OpenAI and Sam Altman

Also read: Microsoft hasn't been worth this much more than Apple since 2003

-Jurica Dujmovic

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(END) Dow Jones Newswires

03-09-24 1003ET

Original post:

Why is Elon Musk suing Open AI and Sam Altman? In a word: Microsoft. - Morningstar