The gloves are officially off between OpenAI and Elon Musk. On Friday, the AI company fired back at Musk's lawsuit with a detailed defense that paints a very different picture of their falling out—one where the Tesla Inc. (TSLA) CEO wasn't defending a nonprofit mission so much as demanding absolute control.

The Cherry-Picking Accusation

OpenAI isn't pulling punches. In a blog post responding to Musk's legal claims, the company accused him of selectively using internal documents to misrepresent both OpenAI's origins and its eventual shift toward a for-profit structure. According to OpenAI, Musk knew exactly what was happening because he was actively involved in planning it.

The company says internal call notes and private journal entries tell the real story: Musk agreed back in 2017 that building artificial general intelligence would require a for-profit entity working alongside a nonprofit. Sound familiar? That's essentially the structure OpenAI operates under today.

"The truth is that we and Elon agreed in 2017 that a for-profit structure would be the next phase for OpenAI," the company stated. They even claim Musk explored forming a public benefit corporation shortly after those discussions.

What Really Happened, According to OpenAI

Here's where it gets interesting. OpenAI argues that negotiations didn't collapse over philosophical differences about their mission. They fell apart because Musk wanted majority ownership and complete operational control of the company.

Internal notes describe Musk insisting on governance authority and succession plans. "He said that he needed full control since he'd been burned by not having it in the past," OpenAI wrote. The company even claims Musk proposed merging OpenAI into Tesla—a proposal they rejected.

OpenAI says it drew a hard line: they refused to place AGI development under any single individual's control, including Musk. That led to his departure in 2018.

Altman Weighs In

OpenAI CEO Sam Altman backed up the company's version of events on X, saying Musk was "cherry-picking things to make Greg look bad," referring to OpenAI President Greg Brockman.

"The full story is that Elon was pushing for a new structure, and Greg and Ilya spent a lot of time trying to figure out if they could meet his demands," Altman wrote.

In a follow-up post, Altman highlighted internal notes allegedly showing Musk sought majority equity to fund his long-term ambitions, calling that context "important" for understanding what was really being debated internally.

High Stakes for OpenAI and Microsoft

Musk's lawsuit is scheduled for trial on April 27, and the stakes couldn't be higher. He alleges OpenAI abandoned its nonprofit mission and misled him while transforming into a for-profit operation closely tied to Microsoft Corp (MSFT), which has poured billions into the company since 2019.

Market commentator Jim Cramer has warned the case could throw a wrench into any future OpenAI public listing. Meanwhile, Kalshi bettors currently give Musk about a 64% chance of winning—though OpenAI points out this is actually Musk's fourth attempt to revive similar claims.

OpenAI suggests the lawsuit is part of a broader strategy to slow them down while Musk's competing AI venture, xAI, scales up. In other words, this might be as much about business competition as it is about broken promises.

For what it's worth, Microsoft (MSFT) is showing negative price trends across short, medium, and long-term timeframes, with weak value and momentum rankings adding another layer of complexity to the situation.