Elon sues OpenAI, Apple's decline, TikTok ban, Bitcoin $100K?, Science corner: Microplastics

Jason says Elon is suing for breach of contract, fiduciary duty and unfair competition. The argument: OpenAI began as an open-source nonprofit, took roughly $50 or $75 million from Elon (both figures are quoted), then became a closed-source for-profit while keeping nonprofit tax breaks. It now has a nonprofit and a for-profit, OpenAI Global LLC, created in 2019. Elon wants the models open-sourced and no financial benefit for shareholders.

I haven't read the legal filings, Jason.

Sacks reads Elon as making two points. First, he was promised open-source AI that no single large company would control, and feels swindled. Second, if a company can start as a nonprofit and convert, everyone could do it to avoid taxes. OpenAI answered by publishing Elon's emails, which Sacks says it treats as a smoking gun because Elon said it needed far more money to compete with Google/DeepMind. Sacks does not know whether it is one.

Chamath says emotions matter less than the rule of law: a large loophole in US tax rules gives California, Treasury and the IRS strong incentives to act. He cites Facebook's transfer of IP to Ireland, which the IRS later sued over after the company's value became clear. His conclusion is that a multi-hundred-billion-dollar OpenAI will have this settled in court.

Friedberg says the emails OpenAI released show Elon accepted a for-profit subsidiary raising billions in outside capital. His precedent is the Cystic Fibrosis Foundation, which put $40 million, then $60 million more, into a company that produced a drug approved in 2012. It sold its interest for $3.3 billion, which he calls venture philanthropy.

What other nonprofit and charitable work does the OpenAI 501(c)(3) actually do?

For Friedberg the test is whether the nonprofit owns a meaningful share of the for-profit and still does charitable work, since 501(c)(3) status requires deploying assets yearly. Jason disputes the analogy, citing people he spoke with: here IP and employees moved into the for-profit, while Mozilla and Samasource kept separate boards and gave staff no large equity. He predicts the IRS will scrutinize OpenAI. That is his view, not an established fact.

Using OpenAI's structure chart, Jason notes Microsoft is reported to hold 49% and guesses the nonprofit holds 5 to 20%. Another host says that seems right. Neither figure is confirmed.