Musk v. Altman week 1: Elon Musk says he was duped, warns AI could kill us all, and admits that xAI distills OpenAI’s models

“I texted Sam Altman, ‘What the hell is going on? This is a bait and switch,’” he told the jury. Microsoft would give $10 billion only if it expected “a very big financial return,” he said.

Is Musk just trying to kill competition?

But Savitt argued that Musk was really suing to undermine OpenAI as a competitor to his empire of tech companies. While he was on the board of OpenAI, Musk was also running Tesla and his brain-implant company, Neuralink. He founded xAI in 2023.

Savitt pulled up an email that Musk had sent to a Tesla vice president in 2017 after hiring Andrej Karpathy, a founding member of OpenAI, to work at Tesla.“The OpenAI guys are gonna want to kill me. But it had to be done,” he wrote.

When asked about it, Musk was flustered. He claimed Karpathy had already decided to leave OpenAI when he recruited him to work at Tesla. “I believe it’s a free world,” he said.

Savitt pulled up another email that Musk sent to a cofounder at Neuralink in 2017. He wrote that they could “hire independently or directly from OpenAI.” When pressed about it, he sounded frazzled. “It’s a free country,” he said. “I can’t restrict their ability to hire people from other companies.” 

Savitt also pointed out that Tesla, SpaceX, Neuralink, and X were socially beneficial for-profit companies, like OpenAI. He stressed that xAI was also a closed-source, for-profit company.

But Musk claimed that xAI was not a real competitor to OpenAI. “We’re not currently tracking to reach AGI first,” he told the jury. 

In fact, Musk admitted that xAI uses OpenAI’s technology. In response to Savitt’s relentless questioning, he said xAI “partly” distills OpenAI’s models. Some people in the courtroom gasped. 

Distillation is a technique where a smaller AI model is trained to mimic the behavior of larger, more capable models, so it can run faster and more cheaply while performing nearly as well. But OpenAI and other AI companies have pushed back against the practice. In February, OpenAI accused the Chinese AI company DeepSeek of distilling its AI models. In August 2025, Wired reported that Anthropic had blocked OpenAI’s access to Claude for violating the company’s terms of service, which prohibit, among other things, reverse-engineering its services and building competing products.