The feds have sided with Elon Musk on a key pillar of his high-profile antitrust lawsuit against Sam Altman-led OpenAI, Microsoft and billionaire Reid Hoffman, The Post has learned.
In November, Musk’s lawyers added Microsoft and Hoffman as defendants in an amended civil lawsuit targeting OpenAI. The lawsuit alleges that OpenAI teamed with Microsoft in an illegal effort to monopolize the AI market in violation of federal antitrust law and its own nonprofit mission.
In the amended lawsuit, Musk’s lawyers alleged that the simultaneous service of Hoffman and another executive, Deannah Templeton, on the boards of OpenAI and Microsoft violated Section 8 of the Clayton Act – which prohibits so-called “interlocking directorates” in which a person serves as a board director at two competing firms.
In a joint statement of interest filed in California federal court on Friday, the Federal Trade Commission and Justice Department – which both have authority to enforce the Clayton Act – essentially state that Musk’s lawyers are correct to argue that the board maneuverings violated the law.
It’s a legal windfall for Musk, who is seeking to void OpenAI’s license with Microsoft, force the parties to divest what are described as “ill-gotten” gains and require OpenAI to adhere to its original mission to develop safe AI for the public good.
Musk claims that he and the public suffered irreparable harm as a result of their actions and also should be entitled to financial damages.
On the issue of interlocking directorates, the agencies argued that an executive’s resignation from the board isn’t necessarily enough to address potential violations of antitrust law under Clayton Act, according to details of the filing obtained by The Post.
Officials accused of violating the law have a “heavy burden” to demonstrate that it is “absolutely clear that the allegedly wrongful behavior could not reasonably be expected to recur,” the joint filing says.
Any attempt to argue that an official’s voluntary resignation nullifies violations of the Clayton Act would undermine the feds’ ability to enforce the law, the filing adds.
Additionally, the FTC and DOJ argue that titling an official as a non-voting board observer rather than a full member does not shield them or their companies from liability under the Clayton Act. The feds asked the court to avoid ruling otherwise.
The Post has reached out to the DOJ and FTC for comment.
Hoffman, the cofounder of LinkedIn, has served as an independent director on Microsoft’s board since 2017. He is also a partner at tech venture firm Greylock.
An original investor in OpenAI, Hoffman joined its board in 2018. He stepped down from the board in March 2023, citing concerns that his investments in firms partnering with OpenAI would be a conflict of interest.
“To be clear, since the start, OpenAI and its board has been very careful to monitor and avoid any conflicts to date,” Hoffman wrote in a LinkedIn post at the time.
Microsoft did not invest in OpenAI until 2019, when it poured $1 billion into the company. It has since committed more than $13 billion.
Templeton is a longtime Microsoft executive who served as a non-voting observer on OpenAI’s board from “approximately November 29, 2023 until July 9, 2024, when it was widely reported she stepped down amid renewed enforcement by the FTC of the Clayton Act’s prohibition on interlocking directorates,” according to Musk’s lawsuit.
“The purpose of the prohibition on interlocking directorates is to prevent the sharing of competitively sensitive information in violation of the antitrust laws and/or providing a forum for the coordination of other anticompetitive activity,” Musk’s complaint alleges.
“Allowing Templeton and Hoffman to serve as members of OpenAI, Inc.’s Board undermined this purpose.”
Representatives for Musk, Microsoft, OpenAI and Hoffman did not immediately return requests for comment.
Musk co-founded OpenAI but became bitter rivals with Altman after disagreements over the firm’s direction. Musk has since founded xAI, which directly competes with the ChatGPT maker.
In December, Musk asked the court to block OpenAI’s plans to transition to a for-profit structure.
“Never before has a corporation gone from tax-exempt charity to a $157 billion for-profit, market-paralyzing gorgon — and in just eight years,” Musk’s lawsuit says.
For its part, OpenAI has said that Musk’s claims are meritless and accused him in a past filing pursuing the suit as part of a “increasingly blusterous campaign to harass OpenAI for his own competitive advantage.”
