Business/Corporate Law

Stavros Gadinis, Professor of Law at UC Berkeley and author of Corporate Ordering: How Corporations Navigate Social Conflict, joins the Boardroom Governance Podcast to discuss how companies make rules, AI governance at leading companies such as Microsoft, OpenAI and Anthropic, corporate decision-making, monitoring and accountability, the role of the general counsel, and how boards can navigate social and technological conflict.

“It’s not simply that social media is addictive, but that it was intentionally so,” said Stavros Gadinis, a professor of law at Berkeley Law School. “There were systematic design choices that the company made, and these design choices lead to longer engagement.”

“The trial between Elon Musk and OpenAI—in which the jury on Monday decided in favor of OpenAI due to the statute of limitations—was about many things: a clash of egos, a governance dispute, and a morality play with few morals,” writes Professor Prasad Krishnamurthy. “But it may be remembered as the first antitrust case of the artificial intelligence era, even though antitrust appears nowhere in the complaint.”

“Corporations are writing the rules of AI,” writes Professor Stavros Gadinis. “The law’s job is to discipline how they write.”

Vincent Joralemon, a senior fellow at UC Berkeley law school, said statutes of limitation vary by state and in California there is a three-year limit for breech of charitable trust and a two-year limit for unjust enrichment – two of the key claims Musk brought. “I’m guessing the jurors got into their room and said, ‘does it seem like Musk knew about this in 2019?’ and everyone said ‘yes’ and then they go, ‘we’re done,’” Joralemon said.

Regardless of the ultimate outcome, neither tech magnate is likely to win in the court of public opinion, said University of California at Berkeley Law School professor Stavros Gadinis. “After weeks of damaging testimony, the public is left choosing between two dueling billionaires, each convinced he is the rightful steward of transformative technology,” Gadinis said by email. “The answer most people will reach is: neither.”

“One of the most important questions raised by the Musk vs Altman trial, where Elon Musk is claiming he was deceived into donating roughly $38mn to OpenAI, the company headed by Sam Altman, has little to do with courtroom strategy and a great deal to do with institutional design,” writes Professor Stavros Gadinis, faculty director of the Berkeley Center for Law and Business.

Last year, Attorney General Rob Bonta — as well as Kathy Jennings, the attorney general of Delaware — signed off on OpenAI’s corporate restructuring, albeit with a list of conditions. As a result, it’s dubious whether Musk has the legal right — known as “standing” — to bring a case, some legal experts said. If he ends up winning the lawsuit, the case will likely be appealed on that basis, said Vince Joralemon, a senior fellow at UC Berkeley’s Center for Law and Technology.

Vincent Joralemon, Director of the Life Sciences Law & Policy Center Berkeley Center for Law & Technology comments on the Musk v. Altman trial.

The jurisdiction, which faces competition from Texas and Nevada, still offers more investor protections than its rivals. But the forces buffeting Delaware aren’t going anywhere, and molding corporate law to the idiosyncrasies of moguls is yielding rules ill-suited to ordinary shareholders, said Berkeley Law professor Stavros Gadinis.