Musk’s xAI accuses rival OpenAI of stealing trade secrets in lawsuit

xAI accuses OpenAI of engaging in a “strategic campaign” to undermine them by hiring key staff. Photo / Getty Images

Elon Musk’s artificial intelligence company has accused rival OpenAI of stealing trade secrets with the help of employees it hired away, new court filings show.

The xAI lawsuit alleges that three former employees – two engineers and a senior executive – passed along source code and other business secrets after they went to work for OpenAI. It also claims there is a “strategic campaign” to undermine xAI, the AI start-up Musk formed in 2023, which also owns X, his social media network.

“By hook or by crook, OpenAI clearly will do anything when threatened by a better innovator, including plundering and misappropriating the technical advancements, source code, and business plans of xAI,” according to the complaint filed with the US District Court for the Northern District of California.

An OpenAI spokesperson said in an emailed statement: “This new lawsuit is the latest chapter in Mr Musk’s ongoing harassment. We have no tolerance for any breaches of confidentiality, nor any interest in trade secrets from other labs.”

The lawsuit continues a long-standing feud between Musk and the company he co-founded, OpenAI, whose direction he has increasingly criticised after it established an early lead in the AI race. Musk left the company years earlier, as it moved in what he regarded as a for-profit direction. OpenAI is also the maker of ChatGPT, which competes with the Musk company’s Grok chatbot.

“The desire to win the artificial intelligence (‘AI’) race has driven OpenAI to cross the line of fair play,” the complaint reads, before going on to allege an effort to “gain [an] unlawful advantage in the race to build the best artificial intelligence models”.

Musk’s xAI has previously sued Apple and OpenAI for allegedly suppressing Grok in its App Store.

The lawsuit contends one OpenAI employee it described as an early xAI engineer “admitted to stealing the company’s entire code base”. It accused the other former xAI engineer of “harvesting xAI’s source code and airdropping it to his personal devices to take to OpenAI, where he now works”. And xAI alleges a former senior finance executive delivered a “secret sauce” of xAI’s data centre strategy to OpenAI.

Confronted over alleged confidentiality breaches, the lawsuit said, the former finance executive replied to a lawyer with a lewd dismissal, “leaving little doubt as to his intentions”.

The lawsuit further alleges their hiring was part of an intentional campaign to steal trade secrets, with the same recruiter involved in poaching both engineers.

“OpenAI is targeting those individuals with knowledge of xAI’s key technologies and business plans – including xAI’s source code and its operational advantages in launching data centers – then inducing those employees to breach their confidentiality and other obligations to xAI through unlawful means,” xAI wrote in its complaint.

An attorney for one of the engineers did not immediately respond to a request for comment.

Though xAI has played catch-up to competitors in the artificial intelligence race, its footprint has expanded over the past year. The General Services Administration said that xAI’s Grok models will be available to US agencies over the next 18 months at a cost of 42 cents per organisation, a rate that draws on a favourite Musk joke.

“We look forward to continuing to work with President Trump and his team to rapidly deploy AI throughout the government for the benefit of the country,” Musk said in a statement.

OpenAI, which was founded in 2015 as a nonprofit, has soared to the top of the tech world in recent years for its advances in generative AI. In March, the venture capital data firm PitchBook listed its valuation at US$300 billion. Investments continue to roll in; this week, Nvidia said it would earmark US$100 billion to help grow OpenAI’s computing capacity.

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