US antitrust regulators offered legal insights on Friday regarding Elon Musk’s lawsuit challenging OpenAI’s transition to a public company, citing potential anticompetitive practices involving OpenAI and Microsoft.
The Federal Trade Commission (FTC) and Department of Justice (DOJ) provided a legal analysis ahead of Tuesday’s hearing in Oakland, California, without explicitly taking sides in the case.
Musk, who co-founded OpenAI and owns the artificial intelligence startup xAI, alleges that OpenAI violated antitrust laws by forcing investors to avoid funding competing AI companies and by sharing board members with Microsoft, also named in the lawsuit. OpenAI has rejected the allegations as baseless, arguing that they lack evidence and amount to harassment.
The FTC is separately investigating Microsoft and OpenAI for potential anticompetitive practices and whether OpenAI violated consumer protection laws. Mark Toberoff, Musk’s lawyer, said the Justice Department and FTC’s involvement highlights regulators’ concern about the alleged misconduct.
OpenAI confirms that the board member issue is moot, as former Microsoft board member Reed Hoffman and CEO Diana Templeton are no longer associated with OpenAI. However, the FTC and DOJ noted that directors can retain sensitive competitive information even after stepping down, and emphasized that monitoring board members are also subject to antitrust laws.
Musk also accuses OpenAI of organizing a mass boycott against competing AI companies, an allegation that the Federal Trade Commission and Department of Justice have described as legally viable, even if the regulator is not directly involved. The outcome of the case could have major implications for the competitive landscape of the AI industry.