Welcome back to the Elon Musk Podcast. I'm your host Will Walden. Today we're digging into the latest twist in the Elon Musk versus open AI legal drama. Musk is moving forward with his lawsuit even after Open AI announced it would keep non profit control over its for profit business. Your ultimate authority for daily Elon Musk news. Exploring the world's biggest ideas with your host Will Walden.
There's something new everyday. And to unpack what this really means and whether Musk has a point at all, I'm joined by tech business analyst and investor Jordan Kessler, who's worked with and advised several major players in AI and venture back companies. Jordan, thanks for. Being here. Always good to be on Will. So Open AI says it's nonprofit parent is still in charge, but Elon Musk says that's just optics and nothing changes is. This a. Meaningful reversal or all of
this is corporate theatre. So it's theatre with consequences. The nonprofit is technically still in control. But what Musk is highlighting, and he's not wrong, is that the structure hasn't solved the fundamental conflict. Open AI is still building closed source AI under a business model designed to serve investors like Microsoft. The nonprofit's control looks thin when you dig into who's on the board and how aligned they are with Sam Altman's goals. That's the dilemma.
So let's talk about those goals. Altman wants to push the frontier of AGI, and that takes money, billions and billions of it. Does this structure let him raise that kind of money? Open AI wants to eat from both plates. It wants public trust by being a nonprofit controlled entity, but it also wants mega scale funding from investors who expect serious returns. The December plan to restructure into a more traditional for profit model reflected that tension.
Investors were telling them we'll fund you, but we need conventional equity and more control. That pressure hasn't gone away. This walk back doesn't resolve it. It just delays the reckoning. Now, Elon's lawsuit claims Open AI betrayed its founding mission. Do you think that's legal strategy or like a personal feud between Elon and Sam Altman? Musk helped start Open AI as a nonprofit to balance what he saw as dangerous, unregulated AI development.
He left when the vision shifted toward private control. Now that Open AI is worth $300 billion and partnered with Microsoft, he sees that shift as a betrayal. But let's be real, he's also running a competitor, XAI, so he's not just acting out of principle. He wants to slow Open AI down. That doesn't mean his legal argument has no merit, but it's not pure. Open AI says his lawsuit is baseless and meant to block their progression. Could this actually hurt Open AI
long term? Yes, not because of the lawsuits outcome, Who knows how that'll go in court, but because of the uncertainty it creates. Investors hate ambiguity and this hybrid nonprofit for profit model is hard to price and even harder to trust. If you're managing billions in capital, are you going to back a company whose controlling board doesn't have to act in your interest? Musk's lawsuit amplifies that doubt for now.
Open AI said Softbank's $30 billion is still on the table, and also Microsoft hasn't even flinched. Does that give them sort of like a lifeline going forward? Microsoft's relationship is strong because it's already deeply integrated Open AI's models into its products. SoftBank is more opportunistic. They'll go where the growth is, but the more governance uncertainty you have, the more
risk those funds carry. If this lawsuit drags out and regulators keep probing, some of that money could evaporate. Now regulators California and Delaware are both reviewing Open a is business structure. Could those reviews force another change in the future? Absolutely. This isn't just about Musk anymore. If either state's attorney general decides Open AI isn't complying with nonprofit rules, they could demand changes,
possibly structural ones. That's a legal risk hammer hanging over every board decision Open AI makes from now until that review ends. So big picture here, what does this fight say about how we build and govern companies working on AGI going forward? It says we don't have a working model yet. Everyone's trying to square a circle. How do you build trillion dollar tech on nonprofit principles? Open AIS model is messy because
they're trying to be the first. Musk's lawsuit is one way to test if this model holds up under pressure. If it doesn't, future labs may have to choose nonprofit for real or for profit, with transparency and regulation. You can't hide behind a hybrid governance forever. Jordan Kessler, thanks for breaking that down. Always sharp, buddy. Appreciate it Will. Hey, thank you so much for listening today. I really do appreciate your support.
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