Musk v Altman: Much ado about nothing

Support for this show comes from Adobe Acrobat. PDF Spaces and Adobe Acrobat is changing the way we're sharing and interacting with files. No more endless follow-ups. No more confusing pings. No more wondering if anyone's even seen your attachment. You can do all that with Acrobat. Keep listening to hear more about PDF Spaces later in this episode. And learn more at adobe.com slash do that with Acrobat. Hello and welcome to Decoder. I'm Nilay Patel, Editor-in-Chief of The Verge. And Decoder is my show about big ideas and other problems. Today I'm talking with Liz Lopato, who spent the last month covering the Musk v. Altman trial and all of its chaos. You'll hear her describe the courthouse as a zoo and explain that there are protests of one kind or another happening outside every single day. Both Elon Musk and Sam Altman are big personalities. And people have lots of feelings about both of them in the AI industry. And somehow, after all of this, nothing really happened. The jury found that Elon had filed his lawsuit after the statute of limitations had run out. You'll hear Liz explain exactly why the jury had to find that and what else is going on here. Beyond the technicalities of the statute of limitations, this trial was nominally about OpenAI's conversion to a for-profit entity from a nonprofit one. And if the way OpenAI went about that conversion cost Elon Musk money. But I think we all know this case was really about Elon Musk being mad at Sam Altman. Or at OpenAI for being successful without him and wanting Sam and the company punished in some way. So in a room full of very emotional, untrustworthy, unreliable narrators all fighting with each other, did anyone even have a reputation left to lose? Is there a floor here for the AI industry? Liz has a lot of thoughts here. I always enjoy having her on the show. Here's Liz Lopato on Musk v. Altman. Here we go. Liz Lopato, you are the senior chaos reporter here at TheVerge.com. You just covered the Sam Altman and Elon Musk trial. Welcome to Decoder. Always a pleasure to be here. I feel like it's always some new, relatively insane thing that we're talking about. We have to stop meeting under these circumstances. I think these are your favorite circumstances. They are my favorite circumstances. A few times a year, we drive you absolutely batty by sending you to cover something. And this trial was 100% one of those situations. The copy got increasingly unhinged. I think the audience liked it. But you were in the courtroom for the majority of Musk v. Altman. You got to see a bunch of the testimony live as these guys took the stand, as Mira Murati and others took the stand. We'll start at the high level. I think the audience probably knows Elon Musk lost. But what was his case about and what were the vibes in the courtroom? There are two things that we should distinguish. There was what the case was ostensibly about, and then there was what the case was actually about. And those are two entirely separate things. So ostensibly, the case was about the violation of a charitable trust, which was that Elon Musk had donated a bunch of money to OpenAI Foundation. And then they created a for-profit. He thinks that's a violation of his charitable trust. And also, the timing of that was right around what is known as the blip, when Sam Altman was briefly removed and brought back. Put a pin in that. That's gonna be important later. That's sort of what we're ostensibly there for. And because it was around the blip, Microsoft was accused of aiding and abetting. And Microsoft very quickly became my favorite part of the case. That's what we were theoretically doing. But in reality, you know, there had been so many changing legal strategies around this. This case was filed, I think, two years ago in state court and then withdrawn and then put in federal court. And, you know, there's just been sort of a myriad of things that have shuffled around since then, including, like, a charge that got dropped right before we went to court. To me, I think that the main point of this was punishing Sam Altman and maybe trying to kneecap OpenAI. And, you know, this is like a case where it's like the two worst people you know are fighting. So it's kind of hard to root for anyone. The most common response that I tended to get when I would talk about this to people or when I would post about it on social media was like, can they both go to jail? That's kind of the vibe. The courtroom was – it was a little bit of a zoo during Musk's testimony. We had one woman who got called down in front of the courtroom by the judge and shooed out because she had been taking photos in the courthouse. On the very last day, we had a guy who was ejected because he had been recording the proceedings in the courtroom. So there was like – there was some shenanigans. And then every time we would leave the courthouse, there would be some kind of protest going on, usually behind the lawyers as they were trying to give their daily summary and spin what they had done in the courtroom. And then like parading behind them would be like a guy in a cybertruck, like holding like an Elon sock sign. Perfect. So that was – that was what that was. I want to come to the legal issues and particularly the ruling from the jury. There's a lot of mechanics there. I just want to second the point that the goal here was for Elon Musk to punish Sam Altman and connect that to the protests and the comments you're getting on social media and certainly the comments we get every time we publish anything about AI. Is there any reputation left to damage for Sam Altman or the AI industry as a whole? Because it seems like both of these guys are at all-time lows. I'm thinking about jury selection when the judge had to just say, It seems like no one likes Elon Musk, but we're going to have to trust that the jury will be fair. What's even left to take away here? I kind of think there's no floor about these things. One of the things that I will say is that from my perspective, I also view Sam Altman as untrustworthy, which is one of the things that this trial was really driving home is like one of the points that Elon Musk's lawyers were making. And I agree. I also think everybody else in the trial was totally untrustworthy. It was not just Sam Altman. It was all of them. And one of the things that I found myself thinking about was that I think the person who really got damaged the most was Mira Murati, who, at least as far as I know, didn't have a reputation as being somebody who was untrustworthy or conniving or whatever. And then in testimony from former OpenAI board members, we found out that she was one of the reasons that Sam Altman got fired and then was immediately texting Sam Altman like, Oh no, Sam, it's very bad. It's very bad, Sam. You remember during this blip that Altman was fired for, what was it, it was a pattern of being untrustworthy or something. He was not consistently candid with the board, which could have meant anything. Anything. And the thing that I remember, because I gossip with a bunch of journalists, and we are ferocious gossips, is all of us were like, Oh, he did something illegal. Let's find out what illegal thing he did. Which, as far as I can tell, no, he didn't. It was just that he was engaging in what I would characterize as relatively normal executive shenanigans where you are maintaining your control of the company by sort of pitching your subordinates against each other, a strategy that is widely used in corporate America, by the way. So, you know, she wouldn't tell people that she was involved in his removal. And she was the CEO, the interim CEO, and then publicly supported him and then publicly was involved in bringing him back. I think someone on the stand, I don't remember who, said Mira was waiting to see which way the wind would blow and didn't realize she was the wind. That was Helen Toner, who was one of the board members who stepped down in this debacle because, you know, obviously, as this proceeded, it became clear that by firing Sam in the way that they had fired him, they had jeopardized the entire company. One of the things that I thought was really interesting from Sam's testimony that I did believe, by the way, is that he thought about just taking a job at Microsoft and getting paid and not having to deal with any headaches anymore. And like, I can certainly imagine, after having been really publicly and embarrassingly fired and having gone through, you know, all of the annoying things that one goes through as a manager and especially as a CEO, just being like, you know what? I just want a paycheck. Who among us has not thought about retiring to a comfy job at Microsoft? Right. And so, like, when he was talking about that, I was like, yeah, that actually, I believe that. That sounds real. And then he obviously changed his mind. But one of the things that I thought was really interesting about that is that also Helen Toner, who, you know, we saw in deposition testimony, one of the things that we found out was that she was involved in potentially trying to sell OpenAI to Anthropic, a company that she has some ties to through the EA movement. And so, like, again, no one here comes off looking good. Like, I thought for a while that Helen Toner was maybe the most reliable witness we had heard from. And then in the cross on the deposition, it was like, so tell us about your relationship with Anthropic Account. And I'm like, whoo! Okay. So, you know, there were no strings attached. And then we had a financial analysis that showed that that money was gone very, very quickly, that they had been spending, because AI is expensive, they had like spent it. And they had spent it in the way that it was meant to be spent. All the other money that happened afterwards had nothing to do with Elon Musk. So there was that. One of the things that I'm just gonna put an asterisk on here that I thought was interesting, but didn't, I think, write about, was that Musk had been paying the rent for OpenAI. They actually had to go back and ask him for money because Neuralink was in the building. And when they got accountants to try to get their books in order so that they could, you know, proceed, the accountants were like, oh yeah, you can't be supporting somebody else's for-profit business in this building. You need to get rent money from Neuralink. They need to pay it back. And so my suspicion is not that, you know, we went into this in any depth, but that Musk had been taking a write-off, like on all of those donations on this building and had been also taking that write-off on the space that Neuralink was using, which is why then, you know, that money had to be paid back to OpenAI. There's a lot here. I mean, there's a lot of just Elon Musk. There's infinitely complicated, like fractally expanding OpenAI layers of companies within the nonprofit that have board control and people can fire Sam Altman. All of that seems enormously complex and maybe worth some future litigation, but the jury just went with statute of limitations. And it seems like that's maybe all they should have been talking about. If that's what was going to end the case this quickly. Why do you think that we spent all the time and the substance and the complication when Elon had just filed too late? Several things, because I did get people asking me about this as well. Like, isn't statute of limitations a legal issue? Why didn't the judge rule on this? And the answer is there was a question of fact, which was when should Elon have known what was going on? And he's saying, I didn't know until the blip. And so I'm within the statute of limitations. And everybody else was saying, he's known the entire time. It's over. That was the thing that was being litigated. It wasn't the only thing that was being litigated, but that was the one that ended up mattering is that the jury was like, yeah, he definitely like knew all of this was happening. If the goal was to trash Sam Altman, of course you would pick the blip, right? Because then you get to pull every document and email and text message from the blip into the trial, into evidence. You get to publish it. We published it. Was that the goal? Was Elon just saying, I only knew about this when Sam Altman got fired in order to put all of that damaging evidence into the record. I think that was what was actually going on. I think it was also meant to distract OpenAI because they did have to pay this very expensive law firm to do some very expensive work to defend them. They didn't just defend the statute of limitations. They defended all of the sub-claims and all of the other sorts of things as well, which is why there is so much in our stories is that they were bringing forward as much as they could to defend every single part of every possible claim because they had to. I think that like making Sam Altman look bad, distracting Sam Altman, maybe, you know, removing resources as Altman approached an IPO. I think those were probably the primary goals. Musk would have been happy with a win. I think he certainly would have been thrilled to force OpenAI to give up a bunch of money, even if it went back to the OpenAI foundation, as he belatedly decided it should go. There are any of a number of things that I think he would have taken as icing on the cake. And, you know, he's, he said that he's going to continue this through the appeals process. Elon appeared at a Forbes conference and he said, I think this is a dangerous precedent to set. If someone can take a nonprofit and convert it to a for-profit, that undermines all charitable giving in America. I don't think Elon understands how precedent works, but it seems regardless of that, he's, he's going to keep tying OpenAI up in litigation for as long as he can. Oh yeah. I mean, he said something very similar to that on stand, by the way. He has like some pet phrases he likes and like dangerous precedent to set undermines all charitable giving in America are like on, on the list. I think he does intend to tie OpenAI up in litigation for as long as he possibly can. You know, bleeding them for cash, which is a strategy that we've seen other billionaires use most famously Sheldon Adelson, who went after a Las Vegas paper, if I remember correctly, not because like they had done anything wrong and they were in fact ruled not to have done anything wrong, but because defending the case was so financially expensive that they nearly went under. That is a strategy you can use if you have unlimited resources is you can just bleed somebody out. So do you feel like if you're Elon Musk and you're really worried about rich people using their charities to enrich themselves, there are a handful of people in his direct orbit running the country that you might want to, might want to take a closer look at. Like this seems like he's saying it because he just wants to keep screwing with OpenAI. Oh, absolutely. Like there's no doubt in my mind that this is like personal for him. And I, the, the thing that I am unable to quite tell, I've been thinking about this for a while, is he personally pissed off at Sam Altman, or is he just affronted that OpenAI succeeded without him? We have to take another short break here. We'll be back in just a minute. Support for this show comes from Adobe Acrobat. We all know sending a file is easy. Making sure your clients understand the file is the hard part. But with PDF spaces and Adobe Acrobat, you can give your clients the full picture with custom intros, audio summaries, and a helpful AI assistant. So if you want to stop the endless followups, do that with Acrobat. Need to make your docs crystal clear? Do that with Acrobat. Want to make sure your clients get everything they need to hear? Do that with Acrobat. Learn more at adobe.com slash do that with Acrobat. This is my other question. Maybe you kill OpenAI and it goes away and you've bought yourself some time. Elon has publicly said that they built Grok incorrectly and they need to start over. They are selling a huge amount of data center capacity at Colossus One to Anthropic, who Elon has hated in the past. But he says it's all fine now because they showed up with a check to buy his data center capacity. Even if you kill OpenAI, it doesn't make XAI the winner. They're basically starting over, as they publicly said. They're giving up their compute capacity. What is the point of this except to just vindictively kill OpenAI? It doesn't seem like I can identify the competitive advantage here. Killing a competitor is not necessarily not a competitive advantage, especially if you have to start over from scratch. Let's say OpenAI is in first or second or third or something, or just like running in a different direction on the track at this point. Who knows what they're doing? If you're in last, it doesn't matter. In some way, like he's helped Anthropic and Google here. Think about this. Let's say Musk wins and OpenAI has to disgorge all this money. And that potentially just blows a hole in the side of the company. I can't rule out that Altman is enough of like a deals guy that he could patch it up. But let's say he can't. OpenAI is at the center of a web of deals. They are huge deals with places like CoreWeave and Oracle and Microsoft. All of these companies, every company in the AI space is like one degree of Kevin Bacon away from OpenAI. Okay. And so if you knock that company out, not only do you have a bunch of talent that comes free and like needs a job now, which you can maybe hire, you also have created conditions where you can negotiate really favorable terms in these now suddenly open data centers with companies that now suddenly have huge holes in their revenue. I wish I could ascribe like that level of 3D chess, you know, but there's a part of me that says this is just personal and vindictive. And we're, we're going to see appeals and further campaigns about how Sam Altman stole a charity. And that will be distracting for OpenAI on one level. And on another level, they're just going to continue selling Codex to people because it is good at writing code. And a lot of software companies seem very taken by that. Do you think this has any meaningful effect on OpenAI in the future? No. I mean, like, here's the thing. We knew going into this trial that Sam Altman did not have a reputation for being perfectly honest, right? That was the upshot of the blip. There was a 17,000 word article in the New Yorker about this. This is something that I effectively think is priced in in the same way that Elon Musk's, let's say scattershot relationship with the truth is also priced in in all of his companies. Like the, like people know who these guys are. None of this is a surprise, which is why I think again that the person who got hurt the most here is Mira Morati, who did not have her reputation trashed before this. So there's You can email us at decoder@theverge.com. We really do read all the emails. Or you can hit me up directly on Threads or Blue Sky. We're also on YouTube. You can watch full episodes at DecoderPod. We also have a TikTok and Instagram. They're also at DecoderPod. They're a lot of fun. If you like Decoder, please share it with your friends and subscribe wherever you get your podcasts. Decoder is a production of The Verge and part of the Vox Media Podcast Network. The show is produced by Kate Cox, Nick Stat, and edited by Ursa Wright. Our editorial director is Kevin McShane. The Decoder music is by Breakmaster Cylinder. We'll see you next time. Support for this show comes from Adobe Acrobat. PDF spaces in Adobe Acrobat is changing the game when it comes to file sharing. You can make your PDFs an interactive experience, track who's interacted with your files, and even offer insights with a customizable AI assistant. You do all that and more with Acrobat. Learn more at adobe.com slash do that with Acrobat.