- On its last business day, the Biden administration issued a report that now has an unlikely fan.
- Elon Musk is using the report as evidence in his antitrust suit against Sam Altman and OpenAI.
- Biden’s outgoing DOJ also weighed in on Musk’s behalf.
Former President Joe Biden left Elon Musk what amounts to a parting gift: a pair of scholarly papers drafted by his Justice Department and his Federal Trade Commission.
Both describe the potential illegality of overly-cozy partnerships between giant cloud service providers like Microsoft and leading artificial intelligence developers like OpenAI.
Musk is now using these Biden administration filings as fuel for his ongoing 2024 lawsuit against colleague-turned-rival Sam Altman, OpenAI’s CEO. The two men helped co-found OpenAI in 2015, with Musk sinking $44 million into the venture before their falling out three years later.
Musk’s lawsuit accuses Altman of betraying OpenAI’s founding mission as a non-profit research lab dedicated to keeping AI technology safe and freely available for the good of mankind.
Under Altman’s leadership, OpenAI is now “a $157 billion for-profit, market-paralyzing gorgon,” the most recent version of the lawsuit alleges.
The Tesla and SpaceX CEO, who in 2023 launched a competing AI effort, is seeking to break up the mutually beneficial — he says monopolistic — partnership between OpenAI and Microsoft.
Under the partnership, the software giant provides vital cloud server space and funding — a “$13 billion commitment,” the lawsuit alleges. In return, Microsoft gets exclusive rights to the startup’s technology, a suite of AI products that includes ChatGPT.
Musk’s lawsuit, filed in federal court in Oakland, California, accuses Altman of racketeering, calling the four-year-old Microsoft-OpenAI alliance an unregulated “de facto merger.” He seeks to void the companies’ licensing agreement and pocket cash damages.
Microsoft “stands to make hundreds of billions from its methodical infiltration of, and increasing leverage over, the non-profit, its technology, and employees,” the suit alleges.
Musk spent at least $277 million backing President Donald Trump’s campaign for reelection. Still, the Biden administration’s recent support of Musk’s claims is not surprising, his attorney, Marc Toberoff, told Business Insider on Friday.
Concern over Big Tech monopolies goes beyond politics, the lawyer said.
“The DOJ and FTC took principled stands,” Toberoff said of the back-to-back Biden administration filings. “Concern over OpenAI and Microsoft transcends party, because their coordinated conduct threatens the safe and effective development of by far the most transformative technology of our time.”
The DOJ filing was the first to drop into the Musk v Altman docket.
Dated January 10, it supports Musk’s claims that Microsoft and OpenAI violated federal antitrust laws by letting two people serve on the boards of directors of both companies — a practice called “interlocking directorates.”
LinkedIn billionaire Reid Hoffman served on the boards of OpenAI and Microsoft from March 2017 until March 2023, the lawsuit alleges.
The lawsuit also alleges that Deannah “Dee” Templeton, Microsoft’s vice president of partnerships and operations, served on both boards from November 2023 until July 2024.
Altman’s side has countered that neither Hoffman nor Templeton — both named as defendants in Musk’s lawsuit — remain on OpenAI’s board.
In late December, Musk asked the US District Court judge presiding over his lawsuit to bar the defendants from “benefiting from wrongfully obtained competitively sensitive information or coordination via the Microsoft-OpenAI board interlocks.”
The DOJ filing supported that request.
Having directors serve on the boards of intertwined companies lets them share sensitive information, potentially undermining fair competition, the DOJ told Judge Yvonne Gonzalez Rogers.
The FTC’s filing was next to drop into the Musk v Altman docket.
Dated January 17 — the last full business day of the Biden administration — it casts a critical eye on three multi-billion-dollar partnerships involving AI, listing them as “Microsoft-OpenAI, Amazon-Anthropic, and Google-Anthropic.”
Microsoft’s $13.75 billion investment in OpenAI dwarves those of the other two partnerships, the report says. The report pegs Amazon’s investment in Anthropic at $8 billion and Google’s investment in Anthropic at $2.55 billion.
“These partnerships involve relationships between the world’s current largest Cloud Service Providers (“CSPs”) and two of the most prominent AI model developers,” the report reads.
“These partnerships therefore have potential for significant impact on AI technology, workers, and consumers,” it warns.
By Inauguration Day, Musk’s lawyers had attached the report as Exhibit 3 to to its latest court filing.
Musk and his co-plaintiffs “agree with the analytic frameworks” of the FTC and DOJ findings, Musk’s side wrote.
Attorneys for Altman and Microsoft did not immediately respond to Business Insider’s request for comment.
The lawsuit’s next court date is February 4.
