Elon Musk’s expanded lawsuit against OpenAI has shed new light on the compensation packages offered to employees at one of the world’s leading AI companies. In an amended complaint that now includes Microsoft and Reid Hoffman as defendants, Musk alleges that OpenAI is engaging in anticompetitive practices through “lavish compensation” to dominate the generative AI market.
According to the lawsuit, OpenAI is projected to spend $1.5 billion on personnel for just 1,500 employees, averaging $1 million per employee. Musk’s lawyers argue that the company is “attempting to starve competitors of AI talent by aggressively recruiting employees with offers of lavish compensation.”
Compensation data from Levels.fyi reveals striking figures: total yearly compensation at OpenAI ranges from $144,275 for technical writers to $1,338,750 for software engineers. The median yearly total compensation stands at $534,197, significantly higher than industry standards. For software engineers specifically, OpenAI’s median compensation of $810,000 dwarfs the San Francisco Bay Area average of $257,500.
Roger Lee, co-founder of compensation benchmarking firm Comprehensive.io, told Bloomberg that the most common salary range for engineering roles at OpenAI (excluding stock awards and bonuses) is $200,000 to $370,000, with more specialized positions commanding $300,000 to $450,000.
This lawsuit represents Musk’s second legal action against OpenAI. He initially sued in March 2024, accusing the company and cofounders Sam Altman and Greg Brockman of abandoning OpenAI’s nonprofit mission through its partnership with Microsoft, which has invested nearly $14 billion in the company. After dropping that suit in June without explanation, Musk refiled in August with expanded allegations.
Musk, who cofounded OpenAI in 2015 but left its board in 2018, has become one of the company’s most vocal critics. He launched his own AI venture, xAI, in 2023. His current lawsuit claims he was “deceived” into cofounding OpenAI and that the company now prioritizes commercial interests over its original mission of developing AI beneficial to humanity.
OpenAI introduced a “capped-profit” structure in 2019 and announced in September 2024 that it’s transitioning toward a for-profit governance model, lending credence to some of Musk’s criticisms about the company’s evolution.
Key Quotes
OpenAI has attempted to starve competitors of AI talent by aggressively recruiting employees with offers of lavish compensation, and is on track to spend $1.5 billion on personnel for just 1,500 employees
This statement from Musk’s lawyers in the amended complaint forms the core of the anticompetitive practices allegation, suggesting OpenAI is using its Microsoft-backed financial resources to monopolize AI talent and disadvantage competitors like Musk’s xAI.
The lawsuit was ‘incoherent’ and ‘contradictory’
OpenAI’s response to Musk’s initial lawsuit in March dismissed his claims, highlighting the contentious relationship between the company and its cofounder. This characterization suggests OpenAI views Musk’s legal actions as lacking merit and potentially motivated by competitive interests.
Our Take
Musk’s lawsuit reveals more than just salary figures—it exposes the fundamental tension in AI development between open, mission-driven research and commercial imperatives. While his allegations of anticompetitive behavior warrant scrutiny, there’s irony in a billionaire who founded his own AI company criticizing another for paying employees well.
The compensation data does raise legitimate questions about market concentration. When one company can afford to pay engineers $810,000 annually—more than triple the regional average—it creates barriers to entry that could stifle innovation. However, this also reflects the genuine scarcity of top AI talent and the enormous value these individuals create.
The real story here isn’t just about money—it’s about control over transformative technology. Musk’s evolution from OpenAI cofounder to competitor and litigant illustrates how high the stakes have become in AI development, where today’s decisions could shape humanity’s technological future for decades.
Why This Matters
This lawsuit illuminates a critical dynamic in the AI industry: the war for talent that’s reshaping compensation structures across tech. OpenAI’s willingness to pay premium salaries—often double or triple industry standards—demonstrates how valuable AI expertise has become in the current market.
The case also highlights growing tensions about AI governance and corporate structure. Musk’s allegations that OpenAI has abandoned its nonprofit mission for commercial gain raise important questions about how AI development should be funded and controlled. With Microsoft’s $14 billion investment giving it significant influence, concerns about market concentration in AI are increasingly relevant.
For the broader tech industry, these compensation figures set new benchmarks that could drive up salaries across the sector, potentially making it harder for smaller AI startups to compete for talent. The lawsuit also exposes the competitive dynamics between major AI players, with Musk’s own xAI competing directly with his former company.
As AI continues to transform industries, questions about fair competition, talent acquisition, and the balance between profit and public benefit will only intensify, making this case a bellwether for future AI industry disputes.
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