Elon Musk v OpenAI, Court Filing, retrieved on April 30, 2024, is part of HackerNoon’s Legal PDF Series. You can jump to any part of this filing here. This part is 9 of 29. F. Defendants Craft Their Path to Profit 91. After Musk rebuffed Altman’s proposal to transform OpenAI, Inc. into a for-profit venture in 2017, Defendants continued to pursue their ambitions, but pivoted to a shrewder and methodical plan. 92. The first step was to quietly craft a profitmaking apparatus that would allow Defendants to do indirectly what Musk had expressly denied them. Altman was appointed the non-profit’s CEO in 2019. At his urging and with his assistance, on information and belief, Defendants began forming numerous for profit entities, in which Altman held generous stakes, and weaving them into an increasingly labyrinthian OpenAI corporate web for the purpose of profiting from OpenAI, Inc.’s assets. 93. On information and belief, Defendants’ OpenAI web proceeded as follows: On March 11, 2019, Altman announced a new for-profit entity, OpenAI, L.P., which was established as, what Defendants call a “capped-profit company,” where investors can make a profit capped at a certain multiple of their investment (e.g., 100x investment). On January 23, 2023, OpenAI, L.P. was converted to OpenAI OpCo, LLC. 94. On September 17, 2020, OpenAI, L.L.C. was formed in Delaware. OpenAI, L.L.C.’s sole member is OpenAI OpCo, LLC. 95. On December 28, 2022, OpenAI Global, LLC was formed in Delaware. On information and belief, OpenAI Global, LLC, like OpenAI, L.P., is a “capped” for-profit entity. OpenAI Global, LLC has two members: Microsoft and OAI Corporation, LLC. 96. On March 17, 2023, OAI Corporation, LLC, was formed in Delaware as a limited liability company. The sole owner of OAI Corporation, LLC is OpenAI Holdings, LLC. 97. On March 17, 2023, OpenAI Holdings, LLC was formed in Delaware, and has multiple members including Aestas, LLC and various individuals. 98. On information and belief, OpenAI OpCo, LLC and OpenAI Global, LLC are managed by OpenAI GP, L.L.C., which on September 19, 2018 was registered as a limited liability company in Delaware. 99. On February 10, 2023, Aestas Management Company, LLC was formed as a limited liability company in Delaware and is managed by OpenAI GP, L.L.C. 100. On information and belief, the other entities—OpenAI Investment LLC, OpenAI Startup Fund Management, LLC, OpenAI Startup Fund GP I, L.L.C., OpenAI Startup Fund I, L.P., OpenAI Startup Fund SPV GP I, L.L.C., OpenAI Startup Fund SPV GP II, L.L.C., OpenAI Startup Fund SPV GP III, L.L.C., OpenAI Startup Fund SPV GP IV, L.L.C., OpenAI Startup Fund SPV I, L.P., OpenAI Startup Fund SPV II, L.P., OpenAI Startup Fund SPV III, L.P., OpenAI Startup Fund SPV IV, L.P.—are also interwoven into Defendants’ corporate web for the purpose of profiting from the non-profit’s assets.[3] Many of these entities were only recently registered and indeed, more OpenAI entities are popping up every month as part of Defendants’ shell game. 101. As with many things, the issue here is one of degree. While there is little concern caused by using a for-profit entity to help fundraise for a nonprofit, it is quite another thing to launch a dense fleet of dozens of for-profit entities to facilitate veiled and unchecked profiteering, rife with conflicts including those of Altman, the non-profit’s CEO and Board member, and Brockman, its CTO, as Defendants have done. 102. The complex profiteering arm of OpenAI—in which, on information and belief, Microsoft and Altman are significant shareholders, and Musk is not—while publicly cloaked as a mere fundraising apparatus, is in reality, the foundation for Defendants’ scheme to control and cash in on OpenAI, Inc.’s technology. 103. When Defendants launched OpenAI, L.P. (now OpenAI OpCo, LLC), they drained the non-profit OpenAI, Inc. of most of its staff and transferred them over to the new company, which also now houses much of OpenAI’s research and development. Altman and Brockman too are now employees of the private, for-profit OpenAI OpCo, LLC, which conveniently shields them from the public oversight and financial disclosures non-profits like OpenAI, Inc. must make. 104. With their web in place, Defendants’ next step was to lock down the non-profit’s technology. Obviously, the public would not pay for something that was open and free, so as detailed below, Defendants began withholding OpenAI, Inc.’s scientific research and hoarding its technology. 105. From there, on information and belief, they hollowed out the nonprofit and fed its assets to the OpenAI For-Profit Entities, from which they stood to make a bundle. Just follow the money. The non-profit’s 2022 IRS tax return[4] showed just $44,485.00 in revenue, but one year later, OpenAI overall reportedly generated hundreds of millions of dollars. 106. In addition, Altman, with the assistance and/or cooperation of Brockman and the OpenAI For-Profit Entities, began to self-deal with impunity. 107. It has been reported that Altman deliberately withheld key information and lied about his personal holdings and investments both in and outside of OpenAI in an effort to keep the then-independent Board from discovering his glaring conflicts of interest. 108. For example, a June 3, 2024 Wall Street Journal article[5] reported that Altman induced OpenAI to partner with Reddit in a deal wherein OpenAI would pay to bring Reddit’s content to OpenAI, Inc.’s ChatGPT. On information and belief, Altman and/or entities he controls own a whopping 7.6% of Reddit, making him one of the company’s largest outside shareholders. After the deal was announced, Reddit’s stock shot up 10%, boosting Altman’s stake by $69 million. 109. On information and belief, Altman, in seeking further business with the non-profit, claimed to be an independent board member of the venture fund, OpenAI Startup Fund, while intentionally withholding from the non-profit’s Board that he, in fact, owned the OpenAI Startup Fund and stood to personally profit from it. Further still, on information and belief, Altman caused OpenAI to sign a $51 million AI chip deal with Rain AI, a company in which he also held a significant interest. On information and belief, Altman and former Apple chief design officer, Jony Ive, have also reportedly launched their own AI device company, which plans to exploit OpenAI’s technology to compete with Apple and build the “iPhone of AI.” And currently, on information and belief, OpenAI is hammering out a deal with Helion Energy (in which Altman owns a massive stake) for OpenAI to buy vast quantities of electricity to power its data centers. 110. On information and belief, Altman, Brockman, and the OpenAI For-Profit Entities have been and will continue to be enriched by their respective stake in OpenAI’s for-profit machine and Altman alone stands to make billions from the humble non-profit Musk co-founded. 111. Defendants’ scheme has now become clear: lure Musk with phony philanthropy; exploit his money, stature, and contacts to secure world-class AI scientists to develop leading technology; then feed the non-profit’s lucrative assets into an opaque profit engine and proceed to cash in. Continue Reading Here. About HackerNoon Legal PDF Series: We bring you the most important technical and insightful public domain court case filings.
This court case retrieved on August 05, 2024, deadline.com is part of the public domain. The court-created documents are works of the federal government, and under copyright law, are automatically placed in the public domain and may be shared without legal restriction. [3] OpenAI, L.P., OpenAI, L.L.C., OpenAI GP, L.L.C., OpenAI OpCo, LLC, OpenAI Global, LLC, OAI Corporation, LLC, OpenAI Holdings, LLC, OpenAI Investment LLC, OpenAI Startup Fund Management, LLC, OpenAI Startup Fund GP I, L.L.C., OpenAI Startup Fund I, L.P., OpenAI Startup Fund SPV GP I, L.L.C., OpenAI Startup Fund SPV GP II, L.L.C., OpenAI Startup Fund SPV GP III, L.L.C., OpenAI Startup Fund SPV GP IV, L.L.C., OpenAI Startup Fund SPV I, L.P., OpenAI Startup Fund SPV II, L.P., OpenAI Startup Fund SPV III, L.P., OpenAI Startup Fund SPV IV, L.P., Aestas Management Company, LLC, and Aestas, LLC are collectively referred to hereinafter as the “OpenAI For-Profit Entities.” [4] 2022 was the last year Defendants made such documents readily available to the public. [5] Jin, Dotan & Hagey, The Opaque Investment Empire Making OpenAI’s Sam Altman Rich, Wall Street Journal (June 3, 2024), https://www.wsj.com/tech/ai/openai-sam-altmaninvestments-004fc785?mod=hp_lead_pos1. Elon Musk v OpenAI, Court Filing, retrieved on April 30, 2024, is part of HackerNoon’s Legal PDF Series. You can jump to any part of this filing here. This part is 9 of 29. Elon Musk v OpenAI, Court Filing, retrieved on April 30, 2024, is part of HackerNoon’s Legal PDF Series . You can jump to any part of this filing here . This part is 9 of 29. HackerNoon’s Legal PDF Series here F. Defendants Craft Their Path to Profit 91. After Musk rebuffed Altman’s proposal to transform OpenAI, Inc. into a for-profit venture in 2017, Defendants continued to pursue their ambitions, but pivoted to a shrewder and methodical plan. 92. The first step was to quietly craft a profitmaking apparatus that would allow Defendants to do indirectly what Musk had expressly denied them. Altman was appointed the non-profit’s CEO in 2019. At his urging and with his assistance, on information and belief, Defendants began forming numerous for profit entities, in which Altman held generous stakes, and weaving them into an increasingly labyrinthian OpenAI corporate web for the purpose of profiting from OpenAI, Inc.’s assets. 93. On information and belief, Defendants’ OpenAI web proceeded as follows: On March 11, 2019, Altman announced a new for-profit entity, OpenAI, L.P., which was established as, what Defendants call a “capped-profit company,” where investors can make a profit capped at a certain multiple of their investment (e.g., 100x investment). On January 23, 2023, OpenAI, L.P. was converted to OpenAI OpCo, LLC. 94. On September 17, 2020, OpenAI, L.L.C. was formed in Delaware. OpenAI, L.L.C.’s sole member is OpenAI OpCo, LLC. 95. On December 28, 2022, OpenAI Global, LLC was formed in Delaware. On information and belief, OpenAI Global, LLC, like OpenAI, L.P., is a “capped” for-profit entity. OpenAI Global, LLC has two members: Microsoft and OAI Corporation, LLC. 96. On March 17, 2023, OAI Corporation, LLC, was formed in Delaware as a limited liability company. The sole owner of OAI Corporation, LLC is OpenAI Holdings, LLC. 97. On March 17, 2023, OpenAI Holdings, LLC was formed in Delaware, and has multiple members including Aestas, LLC and various individuals. 98. On information and belief, OpenAI OpCo, LLC and OpenAI Global, LLC are managed by OpenAI GP, L.L.C., which on September 19, 2018 was registered as a limited liability company in Delaware. 99. On February 10, 2023, Aestas Management Company, LLC was formed as a limited liability company in Delaware and is managed by OpenAI GP, L.L.C. 100. On information and belief, the other entities—OpenAI Investment LLC, OpenAI Startup Fund Management, LLC, OpenAI Startup Fund GP I, L.L.C., OpenAI Startup Fund I, L.P., OpenAI Startup Fund SPV GP I, L.L.C., OpenAI Startup Fund SPV GP II, L.L.C., OpenAI Startup Fund SPV GP III, L.L.C., OpenAI Startup Fund SPV GP IV, L.L.C., OpenAI Startup Fund SPV I, L.P., OpenAI Startup Fund SPV II, L.P., OpenAI Startup Fund SPV III, L.P., OpenAI Startup Fund SPV IV, L.P.—are also interwoven into Defendants’ corporate web for the purpose of profiting from the non-profit’s assets.[3] Many of these entities were only recently registered and indeed, more OpenAI entities are popping up every month as part of Defendants’ shell game. 101. As with many things, the issue here is one of degree. While there is little concern caused by using a for-profit entity to help fundraise for a nonprofit, it is quite another thing to launch a dense fleet of dozens of for-profit entities to facilitate veiled and unchecked profiteering, rife with conflicts including those of Altman, the non-profit’s CEO and Board member, and Brockman, its CTO, as Defendants have done. 102. The complex profiteering arm of OpenAI—in which, on information and belief, Microsoft and Altman are significant shareholders, and Musk is not—while publicly cloaked as a mere fundraising apparatus, is in reality, the foundation for Defendants’ scheme to control and cash in on OpenAI, Inc.’s technology. 103. When Defendants launched OpenAI, L.P. (now OpenAI OpCo, LLC), they drained the non-profit OpenAI, Inc. of most of its staff and transferred them over to the new company, which also now houses much of OpenAI’s research and development. Altman and Brockman too are now employees of the private, for-profit OpenAI OpCo, LLC, which conveniently shields them from the public oversight and financial disclosures non-profits like OpenAI, Inc. must make. 104. With their web in place, Defendants’ next step was to lock down the non-profit’s technology. Obviously, the public would not pay for something that was open and free, so as detailed below, Defendants began withholding OpenAI, Inc.’s scientific research and hoarding its technology. 105. From there, on information and belief, they hollowed out the nonprofit and fed its assets to the OpenAI For-Profit Entities, from which they stood to make a bundle. Just follow the money. The non-profit’s 2022 IRS tax return[4] showed just $44,485.00 in revenue, but one year later, OpenAI overall reportedly generated hundreds of millions of dollars. 106. In addition, Altman, with the assistance and/or cooperation of Brockman and the OpenAI For-Profit Entities, began to self-deal with impunity. 107. It has been reported that Altman deliberately withheld key information and lied about his personal holdings and investments both in and outside of OpenAI in an effort to keep the then-independent Board from discovering his glaring conflicts of interest. 108. For example, a June 3, 2024 Wall Street Journal article[5] reported that Altman induced OpenAI to partner with Reddit in a deal wherein OpenAI would pay to bring Reddit’s content to OpenAI, Inc.’s ChatGPT. On information and belief, Altman and/or entities he controls own a whopping 7.6% of Reddit, making him one of the company’s largest outside shareholders. After the deal was announced, Reddit’s stock shot up 10%, boosting Altman’s stake by $69 million. 109. On information and belief, Altman, in seeking further business with the non-profit, claimed to be an independent board member of the venture fund, OpenAI Startup Fund, while intentionally withholding from the non-profit’s Board that he, in fact, owned the OpenAI Startup Fund and stood to personally profit from it. Further still, on information and belief, Altman caused OpenAI to sign a $51 million AI chip deal with Rain AI, a company in which he also held a significant interest. On information and belief, Altman and former Apple chief design officer, Jony Ive, have also reportedly launched their own AI device company, which plans to exploit OpenAI’s technology to compete with Apple and build the “iPhone of AI.” And currently, on information and belief, OpenAI is hammering out a deal with Helion Energy (in which Altman owns a massive stake) for OpenAI to buy vast quantities of electricity to power its data centers. 110. On information and belief, Altman, Brockman, and the OpenAI For-Profit Entities have been and will continue to be enriched by their respective stake in OpenAI’s for-profit machine and Altman alone stands to make billions from the humble non-profit Musk co-founded. 111. Defendants’ scheme has now become clear: lure Musk with phony philanthropy; exploit his money, stature, and contacts to secure world-class AI scientists to develop leading technology; then feed the non-profit’s lucrative assets into an opaque profit engine and proceed to cash in. Continue Reading Here. Continue Reading Here . Here About HackerNoon Legal PDF Series: We bring you the most important technical and insightful public domain court case filings. This court case retrieved on August 05, 2024, deadline.com is part of the public domain. The court-created documents are works of the federal government, and under copyright law, are automatically placed in the public domain and may be shared without legal restriction. About HackerNoon Legal PDF Series: We bring you the most important technical and insightful public domain court case filings. This court case retrieved on August 05, 2024, deadline.com is part of the public domain. The court-created documents are works of the federal government, and under copyright law, are automatically placed in the public domain and may be shared without legal restriction. deadline.com [3] OpenAI, L.P., OpenAI, L.L.C., OpenAI GP, L.L.C., OpenAI OpCo, LLC, OpenAI Global, LLC, OAI Corporation, LLC, OpenAI Holdings, LLC, OpenAI Investment LLC, OpenAI Startup Fund Management, LLC, OpenAI Startup Fund GP I, L.L.C., OpenAI Startup Fund I, L.P., OpenAI Startup Fund SPV GP I, L.L.C., OpenAI Startup Fund SPV GP II, L.L.C., OpenAI Startup Fund SPV GP III, L.L.C., OpenAI Startup Fund SPV GP IV, L.L.C., OpenAI Startup Fund SPV I, L.P., OpenAI Startup Fund SPV II, L.P., OpenAI Startup Fund SPV III, L.P., OpenAI Startup Fund SPV IV, L.P., Aestas Management Company, LLC, and Aestas, LLC are collectively referred to hereinafter as the “OpenAI For-Profit Entities.” [4] 2022 was the last year Defendants made such documents readily available to the public. [5] Jin, Dotan & Hagey, The Opaque Investment Empire Making OpenAI’s Sam Altman Rich, Wall Street Journal (June 3, 2024), https://www.wsj.com/tech/ai/openai-sam-altmaninvestments-004fc785?mod=hp_lead_pos1.

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