A Verdict in Tech’s Trial of the Century

[00:00:00] [SPEAKER_06] Many companies are struggling to scale their AI deployments or even move them past the pilot stage. Often the problem isn't technology, but organizational misalignment around goals, processes, and incentives. At the break, join Caroline Roach, Senior Partner, IBM Consulting, to learn why.

[00:00:18] [SPEAKER_02] Welcome to WSJ Tech News Briefing. It's Tuesday, May 19th. I'm Imani Moise for The Wall Street Journal. After several weeks of testimony, we've got a verdict in the landmark trial between Elon Musk and OpenAI. We're unpacking the jury's decision and what it could mean for the future of the AI industry. Then, crypto trading is getting the e-sports treatment.

[00:00:41] [SPEAKER_00] Eight traders step into the arena. Every man for themselves. Last two standing go head to head. Winner takes all. Enter the arena.

[00:00:56] [SPEAKER_02] In Lower Manhattan, a boxing gym has become home to a new frontier of competition. A live trading battle. We'll take you inside the ring for one of these tournaments. But first, we're turning back to the legal battle. Yesterday, a jury unanimously dismissed Elon Musk's claims against OpenAI, ending a nearly month-long trial centering one of Silicon Valley's biggest power struggles.

[00:01:26] [SPEAKER_02] What started as a disagreement between co-founders became a legal fight that gripped the tech world. Elon Musk sued OpenAI and CEO Sam Altman, accusing the startup of abandoning its original non-profit mission as it transformed into one of the most valuable private companies in the world. The trial also pulled back the curtain on some of the most powerful personalities in tech, surfacing private text messages, diary entries, and details about Altman's personal investments.

[00:01:54] [SPEAKER_02] WSJ Deputy Chief Technology Editor Bradley Olson joins us now to explain the verdict and what it could mean for the future of the AI industry. And before we get into it, News Corp, the owner of The Wall Street Journal, has a content licensing partnership with OpenAI. So Brad, walk me through the jury's decision.

[00:02:10] [SPEAKER_05] Yeah, in the end, this came down to a technicality. So the jury decided that the claims that Elon brought against OpenAI and Sam Altman and the OpenAI president, Greg Brockman, on the legal claims, which were breach of charitable trust, and then the other one was unjust enrichment, that both of those were passed the statute of limitations. And so the judge accepted that verdict and dismissed the claims.

[00:02:35] [SPEAKER_02] Is this the outcome that legal analysts were expecting?

[00:02:38] [SPEAKER_05] You know, we did a story before the trial, basically saying that Musk was an underdog in the case. And we even looked at prediction markets, which had kind of found that to be true to legal experts and prediction markets. And so, yes, this was the outcome that was expected. However, there was a lot of evidence that kind of brought out, maybe you could say the foundation story of AI. This was back in 2015. Elon Musk provided nearly $40 million in funds for OpenAI's nonprofit.

[00:03:07] [SPEAKER_05] And that's kind of the start of the AI revolution. Or one could look at the AI revolution as having started or heavily accelerated, you know, with those steps.

[00:03:17] [SPEAKER_02] So now that this verdict is in, what's next for Elon Musk? Can he appeal?

[00:03:21] [SPEAKER_05] Yes. His attorney said that they want to reserve the right to appeal. He does have a track record, of course, of appealing and has won some appeals. One of the most famous that he won on appeal was a lawsuit over his pay package at Tesla. And he has strong views and perspectives on what fair play is in the market. And if he feels like he's been disadvantaged in any way, I think he's happy to settle a matter in court.

[00:03:45] [SPEAKER_02] We just got this verdict. So it may take time before we know the full extent of this. But how has the trial impacted the AI industry at large?

[00:03:53] [SPEAKER_05] Well, I think in the end, anytime there's sort of a lot of information coming out and a dispute about who is responsible for something, right? Who made a thing happen? Who is the author of it? I think a lot of this trial ended up being about that. Elon kind of reminding everyone that he was there from the foundation of this thing and could even be considered a co-founder or someone who was in at the ground floor

[00:04:21] [SPEAKER_05] when OpenAI really became a thing, became a new company. You know, the next step that we see is the kind of the public listings of these three main players. You know, SpaceX, Elon Musk, his rocket company now owns his AI company, which was called XAI. And that's headed toward an IPO in less than a month. And then you also have OpenAI potentially doing an IPO. And then its rival Anthropic also doing an IPO.

[00:04:47] [SPEAKER_05] So there's going to be kind of a public market value attached to all these companies very soon. And so I think this trial kind of set the stage for that. And it's another marker of OpenAI kind of clearing another challenge or hurdle in its path to a public listing.

[00:05:02] [SPEAKER_02] Do you think any of the witnesses regret their testimony or what came out in court?

[00:05:06] [SPEAKER_05] That's hard to say. I mean, it's a great question. Anytime you get people like Elon Musk in a trial setting, it's unusual. How many times does anyone tell Elon Musk what to do? But inside a federal courthouse, you kind of project an air of humility. And I think he was trying to give the jury his perspective on what happened. And when he faced cross-examination, he pushed back on a lot of the questions. And there was kind of a bit of a joust, you know.

[00:05:34] [SPEAKER_05] I don't know that he said anything in his testimony that he would say he regretted. But you get to witness this kind of acrimonious back and forth between these larger-than-life figures. It was similar for Sam Altman. He was challenged very heavily in cross-examination. I don't know that he revealed anything he didn't want to. But I think with these high-stakes business litigation trials, whoever wins or loses, a lot of detail comes out about these people that if they were choosing, they probably would choose to keep private.

[00:06:02] [SPEAKER_02] When we look back on this case in a year or two, what do you think the takeaway is going to be?

[00:06:07] [SPEAKER_05] I think we will look back on it as something that litigated the foundational moments of the AI boom. And then I think it also kind of brought us a new perspective and new information about some of these figures that are at the heart of this new technological revolution. So I think it'll be remembered for that, if nothing else.

[00:06:29] [SPEAKER_02] That was WSJ Tech Editor Bradley Olson. What do you make of the verdict? If you're a listener on Spotify, let us know in a comment. Coming up, we're taking you inside a Manhattan boxing gym that's become home to a different form of competition. Crypto trading. That's after the break.

[00:06:56] [SPEAKER_06] Delivering real business results with AI starts with organizational alignment, says Caroline Roach, senior partner, IBM Consulting.

[00:07:02] [SPEAKER_03] You need to understand what problem you're solving, really commit yourself to it, and then be clear on how you're going to change the way you work to deliver those outcomes with AI as a tool, but not the only tool.

[00:07:13] [SPEAKER_06] If deployments aren't optimized to how work gets executed, ROI can suffer as programs stall and adoption lags.

[00:07:19] [SPEAKER_03] Alignment is difficult to achieve because people are rushing to a solution without first defining the problem.

[00:07:31] [SPEAKER_04] Come for the first time ever to the Legend Trade Series presented by Polymarket. We've got eight traders that are going to be entering this arena in just a moment.

[00:07:45] [SPEAKER_02] When the announcer calls it an arena, he means that literally. Inside the Church Street boxing gym, eight players sit inside the ring, starting with $25,000 of paper money and battling through three rounds of trading, while excited spectators watch from the crowd and online livestream. The winner walks away with $10,000 and a Japanese katana. WSJ reporter Vicky Gehuang went to see it firsthand and is here to tell us all about it.

[00:08:13] [SPEAKER_02] And before we get started, we should just note, Polymarket has a data partnership with Dow Jones, the publisher of the Wall Street Journal. Okay, Vicky, so you walk into this event. What did you see?

[00:08:24] [SPEAKER_01] I walked into this boxing gym, which is underground, so the lighting was quite dark. And I saw a lot of monitors, a lot of cords and a lot of screens showing the traders that are sitting inside the boxing ring. And obviously there was just a lot of people talking with each other and socializing.

[00:08:47] [SPEAKER_02] So how did trading become a spectator sport?

[00:08:51] [SPEAKER_01] Trading in crypto has always been kind of a phenomenon in the sense that the cryptocurrencies trade 24-7 and it's a global market. So because cryptocurrency is the kind of space where you have all these different currencies and some traders like this type of tokens more and others like other tokens more. There could be like factions or tribes. So it's naturally kind of like a battleground.

[00:09:17] [SPEAKER_01] And gradually it's evolved into this type of high production event where the companies that sponsor these competitions actually hire commentators. They put on live streams for these competitions. They also invite a lot of these professional crypto traders to join these competitions.

[00:09:39] [SPEAKER_02] What's on the line for the people competing in these competitions?

[00:09:42] [SPEAKER_01] Their reputation to defend. Some of them are pseudonymous. They have online personalities and they have a huge following. So they have fans who would follow them and copy trade with them when they're in these competitions.

[00:09:58] [SPEAKER_02] How much of these tournaments are skill-based versus just gambling?

[00:10:02] [SPEAKER_01] I guess that's a perennial question of trading these days. There's been a lot of discussion about gamification of trading and investing. And in this sense, even though they're trading paper money, which is not real money, a lot of the traders I talked to said they felt the adrenaline rush. They felt the excitement and thrill as if it's trading their real money. But when you ask them would they trade quite like this in real life,

[00:10:29] [SPEAKER_01] many of them gave pretty sensible answers about how you need to have a certain amount of money that you can afford to lose for these type of high leverage trading strategies. And you also need to have money that you put away for long-term investing.

[00:10:45] [SPEAKER_02] And in some cases, the spectators are placing bets themselves. Can you tell us a little bit about that?

[00:10:51] [SPEAKER_01] The spectators, as well as the audience watching the live stream, are placing bets on the prediction markets platform, Polymarket, to bet who's going to be the winner. And that adds another dimension to the sort of entertainment and social energy of the event in the sense that you can not just watch, you can copy trade the trader you're betting on. You can also bet on who is going to win the competition with your own real money.

[00:11:19] [SPEAKER_02] Is this phenomenon unique to crypto culture? Or does it say something broader about where retail investing is headed?

[00:11:27] [SPEAKER_01] I don't think it's unique to crypto trading, because we've also just seen the rise of meme stocks and buying the dip as sort of this perennial condition in the stock market. It's just showing that investors today, especially this internet native generation, are demanding a more fun, social, and immersive way to trade. And the lines between trading and entertainment are becoming more and more blurred, for better or worse.

[00:11:57] [SPEAKER_02] That was WSJ reporter Vicky Gehuang. And that's it for WSJ Tech News Briefing. If you're a listener on Spotify, be sure to leave us a comment. Today's show is produced by Julie Chang and Danny Lewis, with supervising producer Katie Ferguson. I'm Imani Moiz for The Wall Street Journal. We'll be back later this morning with TNB Tech Minute. Thanks for listening.

[00:12:21] [SPEAKER_06] Scaling AI successfully requires more than the right technology. Here again is Caroline Roach, Senior Partner, IBM Consulting.

[00:12:28] [SPEAKER_03] The biggest thing that we were talking about a year ago is what model to use. And the biggest thing that I'm talking about with my clients now is how do I drive change within my organization?

[00:12:39] [SPEAKER_06] Companies able to identify, correct, and then avoid misalignment will be best positioned to deliver meaningful business value from AI.

[00:12:46] [SPEAKER_03] The organizations that are the most successful set very clear targets and have several priorities that are very clear across the enterprise. The technology is really good, but if you're not changing your organizational alignment, not incentivizing your people correctly, not looking at workflows, you're not going to see real value with it.

[00:13:07] [SPEAKER_06] Visit ibm.com slash think slash leadership to learn how building organizational alignment can help deliver AI deployments that scale and drive growth.

[00:13:15] [SPEAKER_04] This content was created by Custom Content from WSJ, a unit of the Wall Street Journal Advertising Department.