OpenAI Files Lawsuit Against Elon Musk's xAI Over Alleged Defamation and Competitive Harm

Washington, April 10 : In a significant legal escalation in the AI sector, OpenAI—the American artificial intelligence company behind ChatGPT—has filed a lawsuit against billionaire entrepreneur Elon Musk and his AI startup xAI, accusing him of launching a malicious campaign to discredit and harm the organization he once helped build.

The lawsuit was filed in a U.S. federal district court on Wednesday, with OpenAI alleging that Musk has consistently attempted to sabotage the company’s reputation and operations, particularly through his competing firm xAI, which was founded in 2023.

Musk’s Influence and Accusations of Defamation

According to court filings obtained by CNBC, OpenAI argues that Musk, who owns Tesla, SpaceX, and social media platform X (formerly Twitter), has used his massive online following of over 200 million users to spread “false and damaging information” about the company. OpenAI also claims that Musk’s public attacks have intensified through press campaigns and social media commentary.

OpenAI is seeking punitive damages and a court order to restrict xAI’s operations, contending that Musk’s actions are deliberately intended to derail the success of a company he once helped create in 2015 alongside CEO Sam Altman.

Failed Acquisition Offer and Competitive Rivalry

The lawsuit also reveals that Musk allegedly made a $97.4 billion bid to acquire control of OpenAI earlier this year through a group of investors. That offer was reportedly rejected. OpenAI has since gained strong backing from other investors and was recently valued at over $300 billion.

Musk’s legal team, led by attorney Mark Toberoff, responded to the accusations via email, claiming that OpenAI’s board failed to take Musk’s acquisition proposal seriously. “Had they considered it, they would have seen how serious we were,” Toberoff stated.

Rapid Rise of ChatGPT and xAI

Since launching ChatGPT in late 2022, OpenAI has witnessed explosive growth. The company claims that over 500 million users now engage with ChatGPT every week and anticipates $13 billion in revenue by 2025.

Musk, who departed from OpenAI publicly in 2018, launched xAI as a rival entity and announced in March 2025 that it had been absorbed into his social platform X via a stock swap deal. This move further deepened tensions between the two tech powerhouses.

OpenAI’s Legal Demands

In addition to punitive damages, OpenAI’s legal filing requests that the court prohibit Musk from continuing his alleged public smear campaign against the company. “Musk cannot stand to see the success of an enterprise he abandoned,” the document states.

The legal battle between OpenAI and xAI reflects the increasingly high-stakes environment in the artificial intelligence industry, where innovation, corporate rivalry, and personal ambition collide in full public view.