Federal agencies have sided with Elon Musk in a significant aspect of his high-profile antitrust lawsuit against OpenAI, Microsoft, and billionaire Reid Hoffman. The lawsuit, filed in November, accuses OpenAI of collaborating with Microsoft in an illegal effort to dominate the AI market, violating federal antitrust law and OpenAI’s original nonprofit mission.
Musk’s legal team added Microsoft and Hoffman as defendants in an amended complaint, alleging that Hoffman’s role on the boards of both OpenAI and Microsoft violated Section 8 of the Clayton Act, which prohibits “interlocking directorates” – situations where individuals serve on the boards of two competing companies.
In a joint statement filed in California federal court on Friday, the Federal Trade Commission (FTC) and Justice Department (DOJ) affirmed Musk’s argument, stating that the actions of Hoffman and another executive, Deannah Templeton, violated the law. The agencies noted that simply resigning from the board would not be sufficient to eliminate potential violations under the Clayton Act. They emphasized that officials accused of such violations must show “absolutely clear” evidence that the misconduct will not recur.
This ruling is a legal victory for Musk, who is seeking to void OpenAI’s partnership with Microsoft, compel divestment of “ill-gotten” gains, and force OpenAI to return to its original mission of developing AI for the public good. Musk claims that both he and the public have suffered irreparable harm and seeks financial damages.
The FTC and DOJ further argued that renaming an executive as a non-voting observer rather than a full board member does not protect them from liability under the Clayton Act. They urged the court not to rule otherwise.
Musk, who co-founded OpenAI before becoming a rival to Sam Altman over differences in the firm’s direction, is also seeking to block OpenAI’s transition to a for-profit structure, calling it a “market-paralyzing gorgon.” OpenAI has dismissed Musk’s claims as meritless and accused him of pursuing the lawsuit for competitive advantage.
