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US supports Musk argument in OpenAI lawsuit
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US supports Musk argument in OpenAI lawsuit
Jan 10, 2025 3:10 PM

Jan 10 (Reuters) - U.S. antitrust enforcers weighed in

on Friday on Elon Musk's lawsuit seeking to block OpenAI's

conversion to a public company, pointing out legal doctrines

that support his claim that OpenAI and Microsoft ( MSFT )

engaged in anticompetitive practices.

The U.S. Federal Trade Commission and Department of Justice

were not expressing an opinion on the case, but offered legal

analysis on aspects of the case ahead of a Tuesday hearing in

Oakland, California. Musk co-founded OpenAI and owns AI startup

xAI.

A spokesperson for Microsoft ( MSFT ) declined to comment.

A spokesperson for OpenAI referred to a court document where

the company said the lawsuit lacks evidence and amounts to

harassment.

Musk's lawyer Marc Toberoff said, "the participation of the

DOJ and FTC is a sign of how seriously regulators take OpenAI

and Microsoft's ( MSFT ) misconduct."

The FTC is separately looking into partnerships in AI,

including between Microsoft ( MSFT ) and OpenAI, investigating

potentially anticompetitive conduct at Microsoft ( MSFT ) and probing

whether OpenAI violated consumer protection laws.

Musk alleges OpenAI violated antitrust law by making

investors agree not to invest in rival artificial intelligence

firms, and by sharing board members with Microsoft ( MSFT ), which is

also a defendant in the lawsuit.

OpenAI has said the board member claims are moot, because

Microsoft ( MSFT ) board member Reid Hoffman, who was on OpenAI's board,

and Microsoft ( MSFT ) executive Deannah Templeton, who had an observer

seat, are no longer affiliated with it.

But even after they leave boards, directors could still have

sensitive competitive information, the FTC and DOJ said. Board

members who only have observer status are not exempt from the

law, the authorities said in their brief.

Musk also claims that OpenAI facilitated a group investor

boycott against its rivals. Such claims are viable even when the

organizer of the boycott is not a member, the FTC and DOJ said.

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