Elon Musk is asking a federal court to block OpenAI from becoming a fully for-profit company.

Lawyers representing Musk, his AI startup xAI and former OpenAI board member Shivon Zilis filed for a preliminary injunction against OpenAI on Friday. The injunction would also stop OpenAI from allegedly requiring its investors to stop funding competitors, including xAI and others.

The latest court filings represent an escalation in legal battles between Musk, OpenAI and its CEO Sam Altman, as well as other long-time involved parties and supporters, including technology investor Reid Hoffman and Microsoft.

Musk originally sued OpenAI in a San Francisco state court in March 2024, before withdrawing that lawsuit and refiling it in federal court a few months later. Musk’s lawyers in the federal lawsuit, led by Marc Toberoff in Los Angeles, argued in their lawsuit that OpenAI violated federal racketeering laws (RICO).

In mid-November, they expanded their complaint to include allegations that Microsoft and OpenAI violated antitrust laws when the chat GPT maker allegedly asked investors to agree not to invest in rival companies, including Musk’s latest startup, xAI.

Microsoft declined to comment.

In their request for a preliminary injunction, Musk’s lawyers argue that OpenAI should be prohibited from “profiting from unlawfully obtained competitively sensitive information or coordination via the board ties between Microsoft and OpenAI.”

“Elon’s fourth attempt, which once again recycles the same baseless complaints, remains completely unfounded,” an OpenAI spokesperson said in a statement.

OpenAI has become one of the largest startups in recent years, with ChatGPT becoming a major success that has helped generate enormous enthusiasm among companies for AI and related large language models.

Since Musk announced xAI’s debut in July 2023, his newer AI company has released its Grok chatbot and is raising up to $6 billion at a $50 billion valuation, in part to buy 100,000 Nvidia chips, CNBC reported earlier this month.

“Microsoft and OpenAI are now seeking to consolidate this dominance by denying competitors access to investment capital (group boycott) while continuing to benefit from years of exchange of competitive information during the formative years of generative AI,” the lawyers wrote in the study filing.

The lawyers wrote that the terms OpenAI asked investors to agree to amounted to a “group boycott” that “blocks xAI’s access to essential investment capital.”

The lawyers later added that OpenAI “cannot hang around in the market as a Frankenstein, composed of any corporate entity that serves Microsoft’s financial interests.”

In July, Microsoft gave up its observer seat on OpenAI’s board, although CNBC reported that the Federal Trade Commission would continue to monitor two companies’ influence on the AI ​​industry.

FTC Chairwoman Linda Khan announced earlier this year that the federal agency would launch a “market investigation into the investments and partnerships between AI developers and major cloud service providers.” Companies the FTC mentioned as part of the study included OpenAI, Amazon, Alphabet, Microsoft and Anthropic.

In the lawsuit, Musk’s lawyers also argue that OpenAI should be prohibited from “benefiting from unlawfully obtained competitive information or coordination through the board ties between Microsoft and OpenAI.”

OpenAI originally started as a nonprofit organization in 2015 and then transitioned to a capped-profit model in 2019, where the OpenAI nonprofit organization was the administrative entity for its for-profit subsidiary. It is currently being converted into a fully for-profit nonprofit corporation, which could make it more attractive to investors. The restructuring plan would also allow OpenAI to maintain its nonprofit status as a separate entity, CNBC previously reported.

Microsoft has invested nearly $14 billion in OpenAI, but said in October as part of its fiscal first quarter earnings report that the company would post a loss of $1.5 billion in the current period, largely due to expectations loss of OpenAI.

In October, OpenAI closed a major funding round that valued the startup at $157 billion. Thrive Capital led the financing, while investors including Microsoft and Nvidia also participated.

OpenAI faces increasing competition from startups such as xAI, Anthropic and technology giants such as Google. According to recent data from Menlo Ventures, the generative AI market is expected to exceed $1 trillion in revenue within a decade, and corporate spending on generative AI has increased 500% this year.

CNBC reached out to Musk’s lawyers on Saturday. They did not respond to requests for comment.

—CNBC’s Hayden Field contributed reporting

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