Elon Musk Criticizes OpenAI for Funding Restrictions on Rivals

Elon Musk has been engaged in a public dispute with OpenAI, a company he helped establish in 2015. The tension escalated when OpenAI recently completed a substantial funding round, securing $6.6 billion. However, the company made a controversial move by urging investors not to support competing projects, including Musk's xAI.

OpenAI's Record Funding Round

OpenAI, founded by Musk and CEO Sam Altman along with nine others, announced a successful funding round totaling $6.6 billion, valuing the company at $157 billion. Major investors such as Thrive Capital, Microsoft, and Nvidia participated in this round. Nonetheless, one condition of the investment raised eyebrows.

Musk's Response

According to sources, OpenAI requested an exclusive funding agreement, requiring investors to abstain from supporting five rival projects, including Musk's xAI. Musk, known for his outspoken nature, took to social media platform X to criticize OpenAI's actions, branding the company as "evil."

Following his departure from OpenAI in 2018, Musk has been vocal about his concerns regarding the company's practices. He previously accused OpenAI of lacking transparency and a dedication to safety. In a lawsuit, Musk alleged that OpenAI had strayed from its core mission of developing AI for the betterment of humanity. Despite legal battles, Musk's public criticism of OpenAI persists.

Industry Response

While OpenAI's move for exclusive funding is uncommon, venture capitalists noted that similar requests have been made in the past. Companies like Uber and Lyft have previously asked investors to refrain from supporting competitors during fundraising rounds. The practice, although controversial, has precedent in the tech industry.

Notably, some of OpenAI's investors have invested in other AI startups, indicating a complex landscape of alliances and competition within the industry. SoftBank, a significant investor in OpenAI, has diversified its portfolio in hardware and software following past investment setbacks.

As Musk and OpenAI remain at odds, the future of their relationship and the implications of OpenAI's funding strategy continue to unfold.

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By: lloydlee@insider.com (Lloyd Lee)
Title: Elon Musk Criticizes OpenAI for Funding Restrictions on Rivals
Sourced From: www.businessinsider.com/elon-musk-mad-openai-asking-investors-not-to-fund-xai-2024-10
Published Date: Thu, 03 Oct 2024 03:00:55 +0000