BILLIONAIRE BLOOD FEUD: MUSK TAKES THE STAND IN $150 BILLION OPENAI TRIAL

0:03 Callarogus Shark Media. Good morning, I'm Garrett Fisher. This is Daily Crime and Justice for Wednesday, April twenty ninth, twenty twenty six. The crew is here, the coffee is hot, and we're doing something a little different today. One story, one trial, one hundred and fifty billion dollars on the line. Let's get into it. There's a federal courthouse in Oakland, California, and yesterday morning it became the most expensive piece of real estate in American jurisprudence because what is happening inside that building is the richest man in the world suing the most influential artificial intelligence company in the world over the future of Depending on who you ask, the human race itself, or one billionaire's bruised ego. Elon Musk is suing open Ai, the company that makes chat GPT, the company he helped found in twenty fifteen as a non profit, walked away from in twenty eighteen after losing a power struggle, and has now spent the better part of two years dragging into court. He is asking for one hundred and fifty billion dollars in damages from open Ai and Microsoft.

1:15 He wants Sam Altman removed from the board of the company Sam Altman runs. He wants the entire restructuring of open ai from nonprofit charity to for profit corporation, unwound, reversed, rolled back to the way it used to be when Elon was in charge. His argument open Ai was a charity. Sam Altman stole the charity. Quote scam Altman and Greg Stockman stole a charity. That is what Musk has been posting to his two hundred and forty million followers on x for months. That is what his lawyer told the jury yesterday in his opening statement. And the consequences, according to Musk himself, are not just about him, not just about Altman, not just about a Silicon Valley feud.

2:04 Quote. The entire foundation of charitable giving in America will be destroyed. Open AI's response sour grapes. We are here, open AI's lawyer told the jury because mister Musk did not get his way at open Ai. He quit. He said we would fail. We did not fail. He started a competitor. He is mad about it. That is what this is. Look, I'm going to be honest with you. There is no good guy in this story. There is a man whose private foundation fails to meet the legal minimum required to keep its tax exempt status, lecturing a federal jury about the sanctity of American charity. And there is a man whose own board fired him in twenty twenty three for and I'm reading this from the official release not being consistently candid in his communications, which is a beautifully lawyered way of saying they thought he was lying to them.

2:56 This is Daily Crime and Justice Today. One story, three segments, the origin how a research nonprofit became a seven hundred and thirty billion dollar corporation, The trial, what happened on day one, what Musk set on the stand, and what open AI's lawyer. Hit him with on the way in. And the bigger picture, the twenty twenty three boardroom coup that almost took Sam Altman down, the witnesses still to come, and what a verdict either way could do to an industry that already feels like it is running ten steps ahead of anyone trying to regulate it. I'm Garrett Fisher, Let's get into it. December twenty fifteen, a small group of artificial intelligence researchers and tech executives gather around a vision build an AI lab, open source nonprofit mission statement, develop artificial intelligence for the benefit of humanity, not for shareholders, not for billionaires, for everybody. The founders include ud Elon Musk.

4:01 They include Sam Altman, who at the time is running y Combinator, the famous Silicon Valley startup accelerator. They include a researcher named Greg Brockman, who would become open AI's president, and Ilia Suitskeever, a brilliant computer scientist who would become its chief scientist. There are others. The whole thing gets seed money about a billion dollars in pledge funding from Musk, from Reid Hoffman, from Peter Thiel, from a few others. The headquarters is at first Greg Brockman's apartment. The pitch is altruistic. It is also if you understand the moment strategic.

4:41 Google had just acquired DeepMind, the most advanced AI lab on the planet, in twenty fourteen. The fear in Silicon Valley among people who actually thought about this stuff was that one company, Google was going to control the most powerful technology in human history. The open ai founders, including mu Dusk, said no, we need a counterweight, a charity, something that will release its research openly, will not be locked behind a corporate paywall, will not be optimized for shareholder value. AI for everyone, and they meant it for a while. Musk would later tell anyone who would listen that he donated about forty four million dollars to Open AI in those first few years, maybe more. The number Musks team gave the court yesterday was thirty eight million in seed money. Either way, tens of millions of dollars from one man into a charity. That part is documented.

5:35 That part is not in dispute. What is in dispute is what happened next. By twenty seventeen, Open AI is burning through cash. Training advanced AI models is one of the most expensive things you can do with a computer. We are talking hundreds of millions of dollars in compute costs to train a single model. Nonprofits do not have that kind of money, and the existing donors, including Musk, are starting to wonder if maybe a different structure is needed. In the summer of twenty seventeen, two of Musk's closest associates, Shiven Zillis and Sam Teller, who served as dual chiefs of staff for Musk at the time were emailing each other about restructuring open Ai, about either turning the original nonprofit into a traditional company or attaching the charity to a for profit operation. About giving Elon Musk fifty five percent of the equity. Sam Altman would get seven and a half percent. The math there should tell you everything you need to know about who was supposed to be in charge. And here is where the two stories diverge.

6:39 Musk's version, as his lawyer, Stephen Molo told the jury yesterday, Yes, Elon was open to a for profit structure, but the concept was that he Elon would have control and the importance of the for profit subsidiary would diminish over time. The nonprofit would always run things, the mission would always come first. It was a vehicle to raise money in the short term, nothing more. Open AI's version, as their lawyer William Savatt told a jury, Musk wanted control, he did not get it, so he left, and once he was gone, Open Ai did exactly what Musk himself had been pushing for. It created a for profit arm to raise the money the company needed. The only difference was Musk was not running it. In twenty eighteen, Musk leaves the open Ai board. The relationship between him and Sam Altman is, to put it gently broken. Around that time, Musk wrote an email submitted his evidence in this trial that says, in part, open Ai is on a path of certain failure relative to Google and Tesla. Quote is the only path that could even hope to hold a candle to Google. Read that again, the only path that could hope to hold a candle. Tesla, not open Ai, not the charity, Tesla, the for profit electric car company that Elon Musk owned. That email, by the way, was sent before chat gpt existed, before open Ai was a household name, before Musk founded xai. So when open AI's

8:12 lawyer told the jury yesterday that Musk did not suddenly care about the charity until the company started making money, that is the email he was talking about. In twenty nineteen, open Ai creates a for profit subsidiary. It signs a one billion dollar partnership with Microsoft. Musk does not sue, He does not object publicly. He continues to make occasional donations. In November of twenty twenty two, open Ai releases chat gpt. The world changes overnight. Within two months, chat gpt has one hundred million users within a year. The AI race is the only race in tech. In March of twenty twenty three, Elon Musk founds his own for profit AI company.

8:54 He calls it XAI. In February of twenty twenty four, Elon Musk's Who's open AI? The timeline tells you something. What it tells you depends on which side of the courtroom you are sitting on. Coming up day one in court, Musk on the stand, the opening statements, and the lawyer Sam Altman's team brought in to handle Elon Musk has done this exact dance with him before. We'll be right back. The Ronald V. Delhams Federal Courthouse is in downtown Oakland, California, twelve miles from Open AI's headquarters in San Francisco, but a.

9:37 World away culturally. Ronald Delhams was a Democratic socialist, a longtime congressman, a Vietnam era anti war activist who ended up on Richard Nixon's enemies list. The courthouse is name for him. He died in twenty eighteen. He would have hated this trial. Yesterday morning, Sam Altman walked into the building through the basement for security. Re so did Elon Musk. The front doors were thick with photographers, lawyers, jurors, and reporters. Inside the courtroom is small. Six benches on the left, three on the right. Judge Yvonne Gonzalez Rogers, the same judge who handled the high profile lawsuit against Apple over the app store sits, elevated above everyone. Before the jury was even brought in. Judge Gonzales Rogers called Elon Musk to the bench. She had questions about his social media, specifically about the two dozen plus posts he made on Monday on x the platform he owns attacking open ai, attacking Sam Altman, calling him scam Altman and Greg Brockman, Greg Stockman accusing them of stealing a charity. Quote from the judge, how can we get things done without you making things.

10:47 Worse outside the courtroom? That is a federal judge asking Elon Musk to please please stop making her trial harder. Musk said he was just responding to things open ai I had said online. The judge asked him and Sam Altman and Greg Brockman to start with a clean slate, keep things to a minimum. They all agreed, we will see how long that lasts. Then opening statements began. Musk's lead counsel, Stephen Molo, stood up and walked the jury through the moral framing. AI should be built for the benefit of humanity, not for the benefit of Sam Altman and Greg Brockman. He explained basic terminology, what artificial general intelligence is, what a charity is supposed to do. He told the jury that years ago Elon Musk had personally warned Barack Obama about the dangers of AI. The government failed to act, so Musk and others built open AI to do what the government would not and the line Molo wanted the jury to leave the courtroom carrying quote, no one should be allowed to steal a charity. To steal a charity is absolutely wrong.

12:00 Three questions. He told the jury to keep three questions in mind throughout the entire trial. Number one, did open AI have a charitable mission to operate as a nonprofit to develop safe AI open source for the good of humanity? Number two? Did Altman and Brockman violate that mission through what they have done with the for profit business? Number three? Did Microsoft know about the charitable mission and substantially assist Altman and Brockman in breaching it? Three? Questions yes, yes, and yes, and Musk wins no on any one of them, and the case falls apart. Then open AI's lawyer stood up. William savat is a partner at the law firm Walktel, Lipton, Rosen and Katz. He represented Twitter now X when Elon Musk tried to back out of buying it for forty four billion dollars. Yes, you heard that right. The lawyer defending open Ai yesterday is the same lawyer who beat Elon Musk in court three years ago. Whoever picks Savag for this case has a sense of humor, and Sabat knew his audience. He told the jury very directly that Musk did not understand artificial intelligence very well. In twenty seventeen and twenty eighteen, he showed them the emails between Musk's chiefs of staff about Musk getting fifty five percent of a for profit open Ai. He explained painstakingly how the open AI nonprofit still controls the for profit company. He told the jury about the work the nonprofit is doing, funding research, redistributing billions,

13:33 working on disease cures and economic equity programs. Then he landed the punch quote, we are here because mister Musk did not get his way at Open Ai. That is what happened. He quit saying they would fail for sure, but my clients had the nerve to go on and succeed without him. Mister Musk did not like that. Sour grapes. That was the through line. Sour grapes from a man who started his own for profit AI company and is now suing the people who beat up to the finish line. Microsoft's lawyer Russell Cohen made the same case. Microsoft had no idea Sam Altman was being fired in November of twenty twenty three. They were blindsided, They were facing a crisis. They are not pulling strings, They are just a partner. And Musk never raised any of these objections about Microsoft's involvement until chat GPT made everyone rich. Then, after a twenty minute recess, Elon Musk took the stand. His own lawyer led the direct examination, walked him through his entire career PayPal, SpaceX, Tesla, the lumberjack work he did as a younger man, the interest in physics in programming. Musk played up the dreamer persona for the jury quote, life just cannot be about solving one miserable problem after another. There have to be reasons to be excited and inspired about the future. Then they got to open AI. Quote from Musk on the witness stand, it is not okay to steal a charity.

15:02 He added that if Altman and open AI win, it would quote give license to looting every charity in America and quote the entire foundation of charitable giving in America will be destroyed. Look, I'm going to be honest with you. The entire foundation of charitable giving in America rests on a lot of things, and I am genuinely not sure one of them is whether or not Sam Altman is on the board of Open AI in twenty twenty six. But here is the part that, depending on your tolerance for irony, will either make you laugh or throw something at the wall. The Musk Foundation, Elon Musk's personal charity, had fourteen billion dollars in assets at the end of twenty twenty four. Federal law requires private foundations to give away at least five percent of their assets every year.

15:50 It is the cost of keeping your tax exempt status. The Musk Foundation has failed to meet. That minimum four years in a row. That is the man on the stand yesterday telling of federal jury that the foundation of charitable giving in America is at stake. There is a playbook for this. The playbook is when you have nothing else, you wrap your argument in something everyone agrees is good children, veterans charity, and you hope the jury does not notice that you are personally the reason for half the things wrong with the thing you claim to defend. The court adjourned for the day, with Musk still on the stand. He is expected to return today. Direct examination will continue, and then Open Aiyes lawyers, including the man who beat Musk in the X case, get their turn at cross examination that should be entertaining commercial tease. The twenty twenty three boardroom coup that almost ended Sam Altman's career, the directors who said the CEO was psychologically abusive, and what is still to come in this trial.

16:53 Stay with us. To understand why this trial matters. You have to understand what happened in November of twenty twenty three, because there is one part of Elon Musk's story that I have to give him. The Open AI board, the. One running the nonprofit that supposedly oversees the for profit, fired Sam Altman November seventeenth, twenty twenty three, the board issued a statement quote Altman was not consistently candid in his communications with the board, hindering its ability to exercise its responsibilities.

17:35 Quote, the board no longer. Has confidence in his ability to continue leading open Ai. That is a corporate way of saying, we think he was lying to us. The board members who voted to fire Altman included Helen Toner, a researcher at Georgetown Center for Security and Emerging Technology, Tasha McCauley, an entrepreneur, Adam DiAngelo, the CEO of Cora, and this is the kicker. Eliaswutzskiver, the open Ai co founder, the chief scientist, the man who, more than anyone except possibly Altman, had built the company. Helen Toner gave an interview about it later on a podcast, months after she had been pushed out, and what she said is on the record now. Toner said the board found out about the public release of chat GPT, the most consequential product launch in modern technology, on Twitter, like everyone else. Altman did not tell them. Toner said Altman had personally owned a venture fund called the Open Ai Startup Fund. The board did not know that they thought open Ai owned it. They had to find out by accident he had been running a private investment vehicle off the open ai brand without telling the people who were supposed to be governing the charity.

18:48 Toner said. Two senior executives at OpenAI brought screenshots and documentation to the board describing what they called, quote, psychological abuse from Altman terns of lying manipulation. Toner said, quote. They used the phrase psychological abuse, telling us they did not think he was the right person to lead the company to AGI. That is not me characterizing it. That is a former board member of the company in question on the record in a podcast. Now, Sam Altman has denied all of this. The current OpenAI board commissioned to review by an independent law firm. That review concluded that the prior board's decision was not based on concerns about product safety, security, the pace of development, or open AI's finances.

19:36 So make of that what you will. What we know for sure is what happened next. Altman was fired on a Friday. By Monday morning, nearly every open ai employee had signed a letter threatening to quit if he was not reinstated. Microsoft CEO Sachia Nadella offered Altman and Brockman jobs at Microsoft. The board folded. By Wednesday, Altman was back, Helen Toner and Tasha McCauley were out. That is not a mistake, that is a choice. The choice the company made was to keep Altman and both of those women. The women who tried to fire Sam Altman in twenty twenty three are on the witness list for this trial. Helen Toner, Tasha McCauley. They will get their day in front of a jury with subpoena power, compelling testimony in a way they never got in twenty twenty three. Also on the witness list Ilia Suitskeever, who voted to fire Altman and then voted to bring him back.

20:32 Mira Marati, the former chief Technology officer of open Ai, who served as briefly interim CEO during the seventy two hour coup and who reportedly provided some of the documentation that triggered the firing. Satya Nadella, the man Microsoft sent in to put out the fire, and Shivon Zillis, the former open Ai board member who later had four children with Elon Musk. That last witness, by the way, Shivon Zialis is one of the more delicate dynamic. In this case, she is testifying about decisions made when she was on the board before her relationship with Musk produced four children. In a case where Musk is the plaintiff, Lawyers love this kind of thing, juries are usually distracted by it.

21:15 The trial is expected to run about four weeks. The first phase, focused on liability. Did open ai breach its charitable mission? Did Microsoft aid? And a bet, runs until around May twenty first. The judge will then take an advisory verdict from the jury. Antitrust claims, which Musk also filed against both companies are not part of this initial phase, and Judge Gonzales Rogers has indicated they may never be heard at all. If Musk wins this thing, open Ai could be forced to unwind its restructuring Sam Altman could be removed from the board. The one hundred and fifty billion dollar damages claim, which Musk says he does not want for himself. He wants it redirected back into the open Ai charity, could blow up the companies planned IPO, which by the way, would have been one of the largest in American history. If open Ai wins, Sam Altman solidifies control of the most influential AI company on Earth.

22:13 The for profit conversion stands. The IPO goes forward, must goes home with a loss and a lot of legal bills. And if you were wondering, does any of this effect the actual development of artificial intelligence? Does any of this protect anybody from the technology that everybody who works on it agrees is going to reshape every job and every industry on the planet. No, none of it does. This trial is about money and control. The mission language is the rapper. Both sides know that the jury is going to have to figure it out. Accountability does not have a legal department. Charity, Real charity does not come with one hundred and fifty billion dollar damages claim attached to it.

22:57 Real charity is what. You do when nobody is watched. Both of these guys have spent the last decade making sure everybody is watching. That is daily crime and justice for Wednesday, April twenty ninth, twenty twenty six. Elon Musk is back on the witness stand today in Oakland. Open AI's lawyers will eventually get their cross examination. Helen Toner, Tasha McCauley, Ilia Sutzkever Mira Muradi, and Satchya Nadella are all expected to testify in the coming weeks. Sam Altman will take the stand in his own defense. The trial is set to wrap around May twenty first. We will be tracking it, not because the world's too richest tech CEOs deserve our attention, they have plenty, but because the question underneath all of this, can a company sell itself as a public good charity, use that to raise money, and then quietly become a for profit machine is a real question, and the answer is going to matter for every nonprofit, every donor, every charitable trust in this country. Whatever you think of Elon Musk, whatever you think of Sam Altman, both can be true at the same time.

24:11 Usually are do better. I'm Garrett Fisher Daily Crime and Justice. We'll see you back on the regular schedule tomorrow. Daily Crime and Justice is a production of Calaroga Shark Media. This episode was assembled with the assistance of artificial intelligence research and scripting tools, drawing on reporting from The New York Times, CNBC, CNN, The Washington Post, Bloomberg, Gizmoto, and other outlets covering the Musk versus Open AI trial in real time. The trial is in active progress. Details witness order and damages figures may shift between writing and recording. Damage's claim cited at one hundred and fifty billion dollars reflects current New York Times reporting. An earlier January twenty twenty six court filing referenced one one hundred and thirty four billion dollars in Wrongful Gains. Open AI valuation is cited at seven hundred thirty billion dollars. Some outlet's place it higher. Helen Toner's characterizations of Sam Altman come from her own podcast statements Sam Altman, Open AI, and an independent review by the law firm Wilmer Hale have publicly disputed her characterizations. This program is intended for informational and entertainment purposes only, and does not constitute legal advice.

25:29 Allegations referenced in this episode are unproven unless otherwise stated, and all individuals named are presumed innocent of any uncharged conduct.