OpenAI just escalated its legal war with co-founder Elon Musk, sending letters to California and Delaware attorneys general demanding investigations into what it calls anti-competitive behavior. The move comes as the two sides prepare for a high-stakes April trial that could reshape the AI industry's competitive landscape. With Musk controlling xAI while sitting on Tesla's board, OpenAI is painting a picture of coordinated market manipulation that state regulators can't ignore.
OpenAI is done playing defense. The company behind ChatGPT sent formal letters to California and Delaware attorneys general this week, urging them to open investigations into what it describes as anti-competitive behavior by Elon Musk and his business associates, according to reports from CNBC.
The timing isn't coincidental. With an April trial looming between the AI giant and its former co-founder, OpenAI appears to be opening a second front in what's become one of tech's most consequential legal battles. While the company hasn't disclosed the specific allegations in its letters, the dual-state approach suggests OpenAI is targeting both Musk's California operations and Delaware corporate structures.
Musk's AI footprint has grown substantially since his acrimonious departure from OpenAI's board. His startup xAI raised billions in funding last year while launching Grok, a competing chatbot integrated directly into X (formerly Twitter). Meanwhile, his position at Tesla gives him access to massive compute resources and data - exactly the kind of competitive advantages that could fuel antitrust concerns.
The letters to state AGs represent a strategic shift for OpenAI, which has largely fought Musk's legal challenges on procedural grounds. By inviting regulatory scrutiny, CEO Sam Altman's team is essentially arguing that Musk isn't just a litigious ex-partner but an active threat to fair competition in the AI market.
California Attorney General Rob Bonta and Delaware AG Kathy Jennings now face pressure to weigh in on a dispute that goes far beyond typical founder drama. If either office opens a formal investigation, it could expose internal communications about how Musk has leveraged his various companies - from Tesla to X to xAI - in ways that potentially disadvantage competitors.
The legal chess match between OpenAI and Musk has been escalating for months. Musk has publicly criticized OpenAI's shift from nonprofit to capped-profit structure, arguing the company abandoned its founding mission of developing AI for humanity's benefit. OpenAI has countered that Musk wanted full control of the organization and left when he didn't get it.
But this latest move goes beyond rehashing old grievances. By framing Musk's actions as potentially anti-competitive rather than just ethically questionable, OpenAI is inviting state enforcers to examine whether his constellation of companies creates unfair market dynamics. Does xAI benefit from preferential access to X's user data? Has Musk used his platform to disparage OpenAI while promoting his own AI ventures? These are questions regulators could now explore.
The Delaware angle adds another wrinkle. Most major tech companies, including many in the AI space, are incorporated in Delaware due to its business-friendly corporate law. If the Delaware AG finds merit in OpenAI's concerns, it could have implications for how AI companies structure competitive relationships and founder exits going forward.
Neither the California nor Delaware attorney general's offices have publicly commented on whether they'll pursue OpenAI's request. Musk hasn't responded to the letters on X or through his companies' official channels. But given his history of combative responses to legal challenges, a public counterattack seems inevitable.
The April trial, which was already expected to air dirty laundry about OpenAI's transformation from scrappy nonprofit to Microsoft-backed powerhouse, now has added stakes. Whatever emerges in that courtroom could feed directly into any state investigations that get launched.
For the broader AI industry, this escalation is a warning shot. As competition intensifies between OpenAI, Google, Meta, and newer entrants like xAI, the line between aggressive competition and anti-competitive behavior is coming under scrutiny. Founders with stakes in multiple AI ventures may find themselves facing similar questions about conflicts of interest and market manipulation.
The fact that OpenAI is proactively inviting regulatory oversight also signals confidence. The company wouldn't be asking state AGs to investigate unless it believed the findings would support its position. That suggests OpenAI's legal team thinks they have evidence of coordination or market abuse that could sway regulators.
OpenAI's decision to pull state regulators into its fight with Musk marks a turning point in how AI companies handle competitive disputes. Rather than settling scores quietly in boardrooms or through traditional litigation, the industry's biggest players are now weaponizing antitrust scrutiny. Whether California or Delaware actually opens investigations remains to be seen, but the mere request puts Musk on notice that his multi-company AI strategy faces regulatory risk. As the April trial approaches, expect both sides to escalate further - this battle is just getting started, and the stakes extend far beyond two former partners settling old grudges.
