Musk admitted in court that xAI "partially distilled" OpenAI models: Everyone does it

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On the fourth day (April 30) of the trial in Musk v. OpenAI, OpenAI’s lawyers pressed Musk on whether xAI had used distillation of OpenAI’s technology to train Grok. Musk initially deflected by saying "almost all AI companies do this," but after being pressed for a direct answer, he admitted it was "partly" true. (Previous coverage: Musk once demanded 51.2% stake and proposed paying salaries with SpaceX stock — OpenAI founding emails fully exposed) (Background: Musk rants in court: Most cryptocurrencies are scams! Reveals OpenAI once considered an ICO to raise funds) While accusing the other party of betraying its non-profit mission, he was using their models to train his own products. On the fourth day of the trial at the California federal court on April 30, the focus unexpectedly shifted from OpenAI’s governance disputes to Musk’s own company, xAI. Admitting only when pressed OpenAI lawyer William Savitt cut straight to the point during cross-examination: Did xAI use distillation to train its own chatbot, Grok, using outputs from OpenAI’s models? Musk initially dodged the question, stating that distillation is "something almost all AI companies do." Savitt did not accept the vague answer and demanded a direct response; Musk eventually admitted "partly." Distillation is the process of using the output of one AI model to train another, which is a common practice. However, if a competitor uses it to cheaply replicate the capabilities of a powerful model, it enters a sensitive area involving terms of service violations and commercial competition. According to TechCrunch, this marks the first time Musk has publicly confirmed that xAI used OpenAI’s models to improve Grok. For a plaintiff currently suing OpenAI, admitting that his own company is using the defendant’s technology could be detrimental in court. Self-ranking AI: Anthropic first, xAI is small In the same day’s testimony, Musk was asked to rank global AI companies. He placed Anthropic first, OpenAI second, Google third, and Chinese open-source models fourth. As for his own company, xAI, he described it as a "much smaller company with only a few hundred employees." Savitt then questioned why xAI transitioned from a benefit corporation to a standard for-profit C-corp, and asked whether Musk’s own companies—Tesla, SpaceX, Neuralink, and X—could also be considered "beneficial to society." Musk replied that they all are, but none of them have profit caps. Savitt challenged him, asking on what grounds he could sue OpenAI for turning for-profit if his own companies are entirely profit-oriented. Four days into the trial, prediction markets have continued to downgrade Musk’s chances of winning. On Kalshi, his odds have fallen by about 8 percentage points from approximately 53.5% before the trial, while on Polymarket, they have dropped to just around 42%. The court will not be in session on Friday and will resume on Monday.

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