FTC, DOJ Weigh Antitrust Issues in Musk’s OpenAI Case

US antitrust regulators have weighed in on Elon Musk’s legal battle against OpenAI and Microsoft, shedding light on legal principles that could bolster his claims of anticompetitive behavior. According to Reuters, the U.S. Department of Justice (DOJ) and the Federal Trade Commission (FTC) submitted a legal brief on Friday, ahead of a critical court hearing scheduled for Tuesday in Oakland, California.

The regulatory agencies did not take a definitive stance on the merits of Musk’s case but provided detailed legal analysis on specific antitrust concerns raised in the lawsuit. The FTC and DOJ pointed out that even board members with observer status could possess sensitive competitive information, and companies cannot sidestep antitrust laws by limiting such directors’ roles.

Musk, who co-founded OpenAI and currently leads the AI startup xAI, filed the lawsuit to block OpenAI’s transition to a public company. He alleges that the partnership between OpenAI and Microsoft is riddled with anticompetitive practices, including restrictive agreements that prevent investors from supporting rival AI companies and the sharing of board members between the two entities.

In a court document referenced by Reuters, OpenAI pushed back against Musk’s claims, asserting that the lawsuit lacks substantial evidence and amounts to harassment. Meanwhile, Marc Toberoff, Musk’s lawyer, welcomed the regulators’ involvement. “The participation of the DOJ and FTC is a sign of how seriously regulators take OpenAI and Microsoft’s misconduct,” Toberoff said.

Read more: South Korea’s Antitrust Body Raises Concerns Over AI Market Competition

The lawsuit also accuses OpenAI of orchestrating an investor boycott aimed at stifling competition in the AI sector. According to Reuters, the FTC and DOJ confirmed that such claims are legally valid, even if the entity accused of initiating the boycott is not directly involved in the affected market.

The case has garnered increased attention amid growing scrutiny of AI partnerships. The FTC is separately investigating Microsoft’s collaborations with OpenAI, examining potential anticompetitive conduct and whether OpenAI violated consumer protection laws.

OpenAI has countered some of Musk’s claims by arguing that they are now irrelevant. The company noted that Microsoft board member Reid Hoffman and executive Deannah Templeton, who previously held roles with OpenAI’s board, are no longer affiliated with the organization. However, the regulators emphasized that liability under antitrust laws does not end with a director’s departure, as these individuals could still retain valuable competitive insights.

Source: Reuters