Exclusive | FTC, DOJ uphold key charges in Elon Musk’s antitrust case against Sam Altman’s OpenAI, Reid Hoffman

The feds have sided with Elon Musk in a key pillar of his high-profile antitrust lawsuit against OpenAI led by Sam Altman, Microsoft and billionaire Reid Hoffman, The Post has learned.

In November, Musk’s lawyers added Microsoft and Hoffman as defendants in an amended civil suit targeting OpenAI. The lawsuit alleges that OpenAI teamed up with Microsoft in an illegal attempt to monopolize the AI ​​market in violation of federal antitrust law and its nonprofit mission.

In the amended suit, Musk’s lawyers alleged that Hoffman and another executive, Deannah Templeton’s, concurrent service on the boards of OpenAI and Microsoft violated Section 8 of the Clayton Act — which prohibits so-called “correlated directorships” in which a person serves. as a board director in two competing firms.

In a joint statement of interest filed in California federal court on Friday, the Federal Trade Commission and the Justice Department — both of which have authority to enforce the Clayton Act — essentially state that Musk’s lawyers have the right to argue that the maneuvers of the board violate the law.

It’s a legal windfall for Musk, who is seeking to void OpenAI’s license with Microsoft, force the parties to disgorge what are described as “ill-gotten gains” and seek that OpenAI adheres to its original mission to develop safe AI for the public good.

Musk claims that he and the public suffered irreparable harm as a result of their actions and should also be entitled to financial damages.

On the cross-directorate issue, the agencies argued that an executive’s resignation from the board is not necessarily enough to address potential antitrust violations under the Clayton Act, according to details of the filing obtained by The Post.

Officials accused of wrongdoing have a “heavy burden” to demonstrate that it is “absolutely clear that the alleged misconduct could not reasonably be expected to recur,” the joint filing said.

Any attempt to argue that an official’s voluntary resignation voids Clayton Act violations would undermine the federation’s ability to enforce the law, the filing added.

Additionally, the FTC and DOJ argue that appointing an official as a non-voting board observer rather than a full member does not protect them or their companies from liability under the Clayton Act. The Feds asked the court to avoid ruling otherwise.

The Post has reached out to the DOJ and the FTC for comment.

Hoffman, the co-founder of LinkedIn, has served as an independent director on Microsoft’s board since 2017. He is also a partner at technology venture firm Greylock.

An original investor in OpenAI, Hoffman joined its board in 2018. He left the board in March 2023, citing concerns that his investments in partner firms with OpenAI would be a conflict of interest.

“To be clear, since the beginning, OpenAI and its board have been very careful to monitor and avoid any conflicts to date,” Hoffman wrote in a LinkedIn post at the time.

Microsoft didn’t invest in OpenAI until 2019, when it poured $1 billion into the company. It has since pledged more than $13 billion.

Templeton is a longtime Microsoft executive who served as a non-voting observer on OpenAI’s board from “approximately November 29, 2023 until July 9, 2024, when it was widely reported that she resigned amid renewed implementation by the FTC’s Clayton Act ban on affiliate directories,” according to Musk’s lawsuit.

“The purpose of prohibiting cross-directorships is to prevent the sharing of competitively sensitive information in violation of the antitrust laws and/or to provide a forum for the coordination of other anticompetitive activities,” Musk’s complaint states.

“Allowing Templeton and Hoffman to serve as OpenAI, Inc. Board members undermined that goal.”

Representatives for Musk, Microsoft, OpenAI and Hoffman did not immediately return requests for comment.

Musk co-founded OpenAI, but became a bitter rival with Altman after disagreements over the direction of the firm. Musk has since founded xAI, which competes directly with the creator of ChatGPT.

In December, Musk asked a court to block OpenAI’s plans to transition to a for-profit structure.

“Never before has a corporation gone from tax-exempt charity to a $157 billion, market-crippling profit gorgon — and in just eight years,” Musk’s lawsuit says.

For its part, OpenAI has said Musk’s claims are baseless and accused him in a past filing of pursuing the lawsuit as part of an “increasingly vicious campaign to bully OpenAI about its competitive advantage.”