Sam Altman has filed a sworn declaration directly challenging a central accusation in Elon Musk’s federal racketeering lawsuit against OpenAI. The Tesla CEO and DOGE head claims that OpenAI forced investors to agree not to fund competing AI companies, an allegation Altman categorically denies as “false.”
The dispute centers on Musk’s lawsuit, originally filed in February 2024, which accuses Altman of colluding with Microsoft to unlawfully crush competition in the artificial intelligence industry. Musk specifically alleges that during OpenAI’s fall 2024 funding round, outside investors were barred from investing in rival AI companies as a condition of their participation.
In his page-long declaration to US District Judge Yvonne Gonzalez Rogers, Altman stated unequivocally: “I did not tell any investor in the October 2024 funding round that their ability to invest in OpenAI was subject to that condition, nor to my knowledge did anyone else at OpenAI.” However, Altman acknowledged that limited restrictions did exist, but only for investors with ongoing access to confidential OpenAI information. These investors were informed that their access would be terminated “if they made non-passive investments in OpenAI’s competitors.”
Altman characterized this restriction as “industry standard” and necessary to protect against misuse of competitively-sensitive information. Crucially, he emphasized that investors were never told they would lose the ability to invest in OpenAI if they chose to fund Musk’s xAI or other competitors.
Musk’s attorney Marc Toberoff argued during Tuesday’s hearing that the investment ban violated federal antitrust laws, claiming both the Biden administration’s Department of Justice and Federal Trade Commission agreed such restrictions would be illegal. He further alleged that OpenAI, “already with 70% of the market, in conjunction with Microsoft — is seeking to strangle their competitors in the crib,” while the company weighs a new funding round that could value it at $340 billion.
Altman’s attorney Sarah Eddy countered that some investors actually put money in both xAI and OpenAI, directly contradicting Musk’s claims of a competitor boycott. The two tech titans, who cofounded OpenAI together in 2015 before their falling out in 2018, are now on opposite sides of a legal battle that could reshape AI industry investment practices. Musk invested $44 million in the venture before their relationship soured.
The judge has not indicated when she will rule on Musk’s demand for an immediate injunction, which would ban OpenAI from imposing investor restrictions and freeze its transition from nonprofit to for-profit status. A hearing on dismissal motions is scheduled for May 28, 2025, with both sides indicating readiness for trial by late 2026 at the earliest.
Key Quotes
That claim is false. I did not tell any investor in the October 2024 funding round that their ability to invest in OpenAI was subject to that condition, nor to my knowledge did anyone else at OpenAI.
Sam Altman stated this in his sworn declaration to the federal judge, directly refuting Elon Musk’s central accusation that OpenAI forced investors to boycott competing AI companies. This statement forms the core of OpenAI’s defense against antitrust allegations.
That restriction is necessary to protect against the misuse of OpenAI’s competitively-sensitive information, and I understand it is industry standard for that reason.
Altman explained the limited restrictions that did exist for investors with access to confidential information, framing them as standard business practice rather than anticompetitive behavior. This distinction is crucial to OpenAI’s legal defense.
OpenAI — already with 70% of the market, in conjunction with Microsoft — is seeking to strangle their competitors in the crib.
Marc Toberoff, Musk’s attorney, made this dramatic accusation during Tuesday’s hearing, painting OpenAI as a monopolistic force using its market dominance and Microsoft partnership to eliminate competition before rivals can establish themselves.
Some investors in OpenAI agreed that in the event they became non-passive investors or with governance rights in other competitors, they would cease getting certain confidential information from OpenAI. That is the agreement that’s established by the evidence.
Sarah Eddy, Altman’s attorney, clarified the actual nature of investor restrictions, emphasizing they only applied to confidential information access, not investment ability. She noted that some investors funded both OpenAI and xAI, contradicting Musk’s boycott claims.
Our Take
This legal showdown represents more than a personal feud between former collaborators—it’s a defining moment for AI industry governance. The case forces courts to grapple with unprecedented questions about how traditional antitrust principles apply to the unique dynamics of AI development, where proprietary models and training data represent extraordinary competitive advantages. Altman’s defense that information-access restrictions are “industry standard” may be technically accurate, but it also reveals how AI companies are establishing norms that could concentrate power among a few dominant players. The irony is striking: Musk, who has repeatedly warned about AI risks and called for regulation, is now invoking antitrust law to challenge practices that may actually be common across the industry he helped create. Regardless of the outcome, this case will likely accelerate regulatory scrutiny of AI companies’ business practices and investor relationships, potentially reshaping how the next generation of AI startups structure their funding and competitive positioning.
Why This Matters
This legal battle between two of AI’s most influential figures carries profound implications for the entire artificial intelligence industry. The outcome could establish critical precedents for how AI companies structure investor agreements and whether restrictions on competitive investments constitute antitrust violations. With OpenAI reportedly controlling 70% of the market and pursuing a valuation of $340 billion, the case touches on fundamental questions about competition, market dominance, and fair business practices in the rapidly evolving AI sector.
The dispute also highlights the tension between protecting proprietary AI technology and maintaining competitive markets. If courts side with Musk, AI companies may face significant constraints on their ability to protect confidential information through investor agreements. Conversely, if Altman prevails, it could validate industry-standard practices for safeguarding competitive advantages in AI development.
Beyond legal precedent, this case exposes the fractured relationships and competitive dynamics among AI’s founding generation. The transformation of OpenAI from a nonprofit research organization to a for-profit powerhouse backed by Microsoft represents a broader shift in AI development from open collaboration to commercial competition, with significant implications for innovation, access, and the future direction of artificial intelligence technology.
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Source: https://www.businessinsider.com/sam-altman-denies-musk-claim-openai-investors-ban-rivals-2025-2