Hear that noise? It was Sam Altman, breathing a huge sigh of relief.
The OpenAI CEO won a huge victory on Monday morning, with a jury in Oakland, California, rejecting Elon Musk’s claims against the ChatGPT-maker after deliberating for less than two hours. A Musk victory could have shaken the industry and possibly ousted Altman. Instead, OpenAI has cleared a major hurdle in its lead-up to a gigantic initial public offering. Now, the race is on with rival Anthropic.
Musk can still appeal. He’s argued that Altman, OpenAI president Greg Brockman, and their company “stole” the original OpenAI nonprofit by fusing it with a major commercial business, and that Microsoft helped them do it. The jury closed this round of the legal battle by finding that Musk’s claims were barred by statutes of limitations, meaning he waited too long to bring the case. The judge accepted those findings.
The Tesla CEO sought $134 billion in damages and for Altman and Brockman to be kicked from their posts. Those damages could have crushed OpenAI’s standing, as the ousters would have left the company without its two most prominent leaders.
In the trial, Musk’s lawyers used testimony from Altman’s former colleagues to cast him as an untrustworthy leader, chipping away at his credibility. These revelations aside, the suit turned out to be mostly a distraction. And with the win, OpenAI puts the threats of damages “in the rearview mirror,” Wedbush analyst Dan Ives wrote Monday.
“OpenAI can shift its strategic focus to capitalizing on the AI Revolution,” Ives wrote. He added that the decision removes the “$134 billion overhang on the company’s operations” from the threat of damages, freeing it up to pursue the IPO.
The tailwind couldn’t have come at a better time. OpenAI is battling its San Francisco rival, Anthropic, on several fronts: for talent, for business customers, and to be the first to go public later this year or early next year. Whichever company comes in last to the market will have to follow its rival’s IPO narrative, and billions of dollars in investor capital will have already been absorbed.
The months ahead will see each frontier AI lab keep up torrents of releases, jockey for computing resources, and fight for market share in AI coding. The companies have each been pushing to grow adoption of their coding tools — Claude Code for Anthropic and Codex for OpenAI. Ramp data from April showed that Anthropic had passed OpenAI in business adoption for the first time.
OpenAI-backed chipmaker Cerebras tested the market’s appetite for tech IPOs last week and enjoyed a hefty bump in value during its first day of trading. With OpenAI, Anthropic, and SpaceX expecting to go public soon, Cerebras’ sub-$100 billion market cap makes it a small fry.
Anthropic and OpenAI could see IPOs valued at over $1 trillion. Now that the Musk lawsuit is over, Altman can focus on getting his company that gigantic windfall first.