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1:04

Hello and welcome to

1:06

this week's Better Offline

1:08

monologue. I'm your host Ed

1:10

Citron. And I know some of

1:13

you are going to say, Ed,

1:15

didn't you say we'd get a

1:17

second part? Didn't you say we'd

1:19

get a second part? Ed,

1:21

where's the second part? It's

1:24

coming tomorrow. You get a

1:26

monologue as well. Good Lord,

1:29

the complaints from some of

1:31

you. Just kidding, you're all very

1:33

nice. Now, because I deeply hate

1:35

myself, I decided to sit down

1:37

and read case 424cV 04722YGR from

1:40

the United States District Court of,

1:42

well it's the Northern District of

1:44

California. Nevertheless, what I'm talking about

1:46

of course is Elon Musk's lawsuit

1:48

against Open AI filed in August,

1:50

November of last year. There was

1:53

an amended complaint. Nevertheless, Elon Musk

1:55

is alleging multiple kinds of fraud

1:57

as well as violations of the

1:59

Sherman Act. anti-monopoly law from the

2:01

late 1800s, which most notably was the

2:03

same law that might lead to the

2:05

breakup of Google's ad tech and search

2:07

businesses. Elon Musk, he's suing and he

2:09

loves to sue. But in layman terms,

2:11

Musk alleges that Sam Altman tricked him

2:14

into funding open AI as a charity,

2:16

when he actually wanted it to be

2:18

more like a for-profit entity, a classical

2:20

startup model. Musk also alleges a conspiracy

2:22

by open AI to stop people

2:24

who invested in open AI from

2:26

investing in other generative AI companies,

2:28

specifically Musk's own AI, as long

2:30

as others like Anthropic. This sounds

2:32

like some musky and bullshit, but

2:34

this is actually true. It was

2:36

reported by the information in other

2:38

outlets. The lawsuit itself is contrived,

2:40

including annoying things like Musk's lawyers,

2:42

referring to open AI's tax exempt

2:44

non-profit as a for-profit market paralyzing

2:46

Gorgen. Just, you don't need to

2:48

write like this. You fucking loses.

2:50

Anyway, it is pretty interesting though,

2:52

and it explores the deeply weird

2:55

beginnings of Open AI itself. To

2:57

explain, Open AI was originally founded

2:59

in 2015 by Elon Musk, Sam

3:01

Orman, and a selection of other

3:03

engineers. Specifically, it's a non-profit making

3:05

open source artificial intelligence, and it

3:07

was meant to be a research

3:09

house. Now, another thing is it

3:11

was specifically made as a reaction

3:13

to Google's acquisition of artificial intelligence

3:15

firm, deep mind. The plan, according

3:17

to email shared as part of

3:19

the lawsuit, was to beat Google

3:21

to the punch by making artificial

3:23

general intelligence. You know, the entirely

3:25

fictional concept of a conscious autonomous

3:27

computer, and then they'd go and

3:29

open source it, in what Sam

3:31

Orton called an AI Manhattan project.

3:33

Just, I could go into the

3:35

history there, but... Is that really

3:37

what you want to compare this

3:39

in any way, anywhere? Orman would

3:41

go on to tell Elon Musk

3:43

that the mission would be to

3:45

create the first general AI, AGI,

3:48

and use it for an individual

3:50

empowerment, i.e. the distributed version of

3:52

the future that seems the safest.

3:54

More generally, safety should be a

3:56

first-class requirement, and that is a

3:58

quote by the way. With the

4:00

technical... owned by the Foundation, referring

4:02

to open AI, and use for

4:04

the good of the world. Just

4:06

a lot of bollocks, really, anyway.

4:08

Things began to get tense in

4:10

September 2016, when Sam Altman arranged

4:12

a deal with Microsoft to buy

4:14

60 million dollars of compute for

4:16

a, well, for 10 million dollars,

4:18

in exchange for evangelizing Microsoft as

4:20

their preferred cloud provider, along with

4:22

some sort of vague consultancy services

4:24

over Microsoft's models. Musk would

4:26

respond to the terms by saying, fine

4:29

with me if they don't use the

4:31

active messaging, would it be worth way

4:33

more than 50 million, not seem like

4:36

a Microsoft's marketing bitch. Two months later,

4:38

Microsoft would put out a blog post

4:40

saying that Open AI was choosing as

4:43

your primary cloud platform and that Open

4:45

AI would become an early adopter of

4:47

Zior N-series virtual machines, some of Microsoft's

4:50

early GPU compute instances. It's been going

4:52

quite a while. A year later, in

4:54

an exhibit from the trial from September

4:57

20th, 2017, things would get a little

4:59

more afraid, with Ilia Sutzkaver, a gifted

5:01

engineer recruited by Musk and OpenAI's earliest

5:04

days, sending an email to both Musk

5:06

and Altman sharing concerns about the future.

5:08

Altman worried about how much money it

5:10

would cost to fund OpenAI, had been

5:13

considering finding a way to make it

5:15

a, wouldn't you guess it, for-profit entity.

5:17

But Sutzkaver had other problems, and was

5:20

far more worried about Altman and Musk.

5:22

In the email, Sudskeva raised concerns that

5:24

Elon Musk wanted unilateral absolute control over

5:27

the AGI, and that while Musk had

5:29

claimed otherwise, in negotiating how to keep

5:31

Open AI going, it was very clear

5:34

that, and I quote, absolute control was

5:36

extremely important to him. As an example,

5:38

Sudskeva added that Musk had said that

5:41

he needed to be CEO of the

5:43

new company so that everyone would know

5:45

that he was the one in charge,

5:48

even though he also stated that he

5:50

hated being CEO and would much rather

5:52

not be CEO. Suzkva added that Musk's

5:55

concerns that there would be an AGI

5:57

dictatorship run by Dimes Hasabis, CEO of

5:59

Deep Mind, but that in the current

6:01

structure that Musk was suggesting... suggesting he

6:04

would become a dictator if he chose

6:06

to. All very good stuff. Sitzkava bizarrely

6:08

then immediately moved on to say something

6:11

very very similar to Sam Altman, saying

6:13

that, and I quote, he didn't understand

6:15

why the CEO title was so important

6:18

and that Sam Altman's reasons had changed

6:20

and that it was really hard to

6:22

understand what was driving them. Sitzkava also

6:25

added a question, and I quote, is

6:27

AGI truly your primary motivation? How does

6:29

it connect to your political goals? How

6:32

has your thought process changed over time?

6:34

Altman would reassure Musk both personally and

6:36

through others that he remained focused on

6:39

Open AI's non-profit mission. In January 2018,

6:41

Altman would suggest a ridiculous idea, selling

6:43

cryptocurrency to fund Open AI, which Musk

6:46

would warn would simply result in a

6:48

massive loss of a credibility for Open

6:50

AI everyone associated with the ICO, referring

6:52

of course to an initial coin offering,

6:55

a flimsy idea that just means... just

6:57

buy a bunch of tokens before the

6:59

thing goes live. Basically how crypto works,

7:02

I guess. It was a whole boom.

7:04

I'm not doing a fucking podcast about

7:06

it. Let's move on. Musk would step

7:09

down from Open AI in February 2018

7:11

and a month later, Samuel would propose

7:13

a fixed maximum term equity raise, essentially

7:16

selling stock in Open AI, but an

7:18

associated entity. Yet it was still a

7:20

non-profit at the time and that had

7:23

a maximum amount you could make on

7:25

buying it. It's just very confusing. And

7:27

what it basically means is, it means

7:30

that they would create an entity on

7:32

the side that you could raise money

7:34

for that would also own all the

7:37

bits. I'll get to that in a

7:39

second. Nevertheless, this is all extremely dodgy

7:41

and weird. Around a year later in

7:43

2019, Sam Altman would eventually create the

7:46

legally precarious, for-profit arm of Open AI.

7:48

what I was just talking about. And

7:50

it was called Open AI LP. And

7:53

immediately, according to Elon Musk's lawsuit, transferred

7:55

most of the company's assets and staff.

7:57

The same year, Open AI would strike

8:00

an exclusive partnership. with Microsoft to provide

8:02

the compute for their models. As part

8:04

of the deal, Open AI would give

8:07

Microsoft full license to use their pre-agI

8:09

intellectual property and research, which is to

8:11

say literally everything they've ever made. And

8:14

this would in turn make, well, this

8:16

is the funny weird part. This is the

8:18

really crazy, this is the part that

8:20

really gets me. They would own

8:22

everything, Microsoft would own everything, until...

8:24

They hit AGI. Now AGI at this

8:27

point has been defined by Open

8:29

AI and Microsoft is when they

8:31

hit $100 billion in profit. Every

8:33

time I read about this stuff

8:35

I just think, who is the

8:37

idiot here? Is it such an

8:39

Adela? Or is it Sam Altman?

8:41

Or are they both just the

8:43

kind of mediocre rich guy who

8:45

just bounces their skulls together and

8:47

they say, who has the shittiest

8:49

idea? Who will be the dumbest

8:51

boy today? Nevertheless, Microsoft owns everything

8:53

Open AI makes until they invent

8:55

AGI, by which I mean they

8:57

make a hundred billion dollars in

8:59

profit. It's also god damn stupid.

9:02

It's also stupid. Now at

9:04

some point I want to do an

9:06

entire episode on this lawsuit, because

9:08

it's got so many exhibits and

9:10

so many warring incentives. Elon Musk's

9:12

XAAI competes directly with Open AI

9:14

to make large language models that

9:16

no one really needs and that

9:18

cost more to run than they

9:20

will ever make. And this lawsuit,

9:22

as with others, features broad demands

9:24

for discovering depositions of people at

9:26

LinkedIn co-founder and former Open AI

9:28

board member Reid Hoffman, and attempts

9:30

to name both Microsoft and Hoffman

9:32

himself as co-defendants. Since filing the

9:34

lawsuit, an Elon Musk-led consortium of

9:36

buyers has offered $97.4 billion for

9:38

the assets of Open AI's charity,

9:40

an offer that would require multiple

9:43

different government agencies to approve, which

9:45

Open AI's board has now declined.

9:47

Either way, while Musk is regularly full

9:49

of sheer, he's right about one thing.

9:51

Sam Orman clearly had no intention of

9:53

ever keeping Open AI as a non-profit,

9:55

nor was he ever dedicated to doing

9:57

so, or really anything other than may...

10:00

himself CEO and getting a billion dollars.

10:02

Since 2019, Open AI has raised over

10:04

20 billion dollars in funding and is

10:06

reportedly raising as much as 40 billion

10:08

dollars in the next round, led by

10:11

fucking Masayoshi son of Softbank. It's so

10:13

good, I love it. And they're likely

10:15

doing this because the company burned 5

10:17

billion dollars in 2024 and is set

10:19

to as much as double that in

10:22

2025 according to estimates. Musk's lawsuit is

10:24

likely an attempt to interfere with this

10:26

funding or to destabilize Open AI at

10:28

its weakest week its weakest point. It's

10:30

flimsy status as a non-profit that will

10:33

require a great deal of legal effort

10:35

to unwind if it's even possible at

10:37

all. And I must be clear, it

10:39

may not be possible. I don't think

10:41

there's any precedent of anyone ever taking

10:44

a non-profit of this size, of this

10:46

weirdness connected to like 20 different for-profit

10:48

entities and turning it into a for-profit

10:50

and it just doesn't make sense. But

10:52

I will tell you something that might

10:55

make you happy or might just make

10:57

you laugh, which is open AI only

10:59

has a year and a half to

11:01

do so, a year and a half

11:03

to turn from a non-profit into a

11:06

for-profit, because a year and a year

11:08

and a equity... they raise but it's

11:10

not equity it's some weird for-profit sharing

11:12

nevertheless all the money they've raised in

11:14

the last round the six point something

11:17

billion dollar one yeah it all turns

11:19

into debt oh well i'm sure they'll

11:21

work out they sure haven't yet John

12:02

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