Elon Musk drops suit against OpenAI and Sam Altman

Elon Musk on Tuesday withdrew his lawsuit against OpenAI and two of the company’s co-founders, Sam Altman and Greg Brockman, in California state court. Musk’s decision to file to dismiss the suit came just one day after he publicly criticized OpenAI and its new partnership with Apple.

The case was dismissed without prejudice, according to a court filing obtained by CNBC.

In February, Musk had filed a lawsuit against OpenAI, Altman and Brockman — the current CEO and president of OpenAI, respectively — for breach of contract and fiduciary duty.

A hearing was scheduled for Wednesday in San Francisco, in which the judge was going to consider whether the case should be dismissed as requested by the defendants.

Experts told CNBC in March that the case was built on a questionable legal foundation, because the contract at the heart of the suit was not a formal written agreement that was signed by all parties involved.

Rather, Musk had alleged that the early OpenAI team had set out to develop artificial general intelligence, or AGI, “for the benefit of humanity,” but that the project has been transformed into a for-profit entity that’s largely controlled by principal shareholder Microsoft.

Musk had used much of the 35-page complaint (plus attached exhibits) he filed in March to remind the world of his position in the creation of a company that’s since become one of the hottest startups on the planet, (OpenAI ranked first on CNBC’s Disruptor 50 list in 2023) thanks largely to the viral spread of ChatGPT.

“It’s certainly a good advertisement for the benefit of Elon Musk,” Kevin O’Brien, partner at Ford O’Brien Landy LLP and former assistant U.S. attorney, told CNBC at the time. “I’m not sure about the legal part though.”

Last year, Musk debuted his own AI startup and OpenAI competitor, xAI, which last month announced a $6 billion Series B funding round. Investors included Andreessen Horowitz, Sequoia Capital and Fidelity Management & Research Company.

X.AI seeks to “understand the true nature of the universe,” according to its website. Last year, X.AI released a chatbot called Grok, which the company says is modeled after “The Hitchhiker’s Guide to the Galaxy.” The chatbot debuted with two months of training and has real-time knowledge of the internet, the company claims.

Representatives for Musk and Altman did not immediately respond to a request for comment.

—CNBC’s Lora Kolodny contributed to this report.

Correction: The lawsuit was filed in February. An earlier version of this story misstated the month.