How Musk might still block OpenAI's shift to for-profit model
What's the story
Elon Musk's legal battle against OpenAI, a company he co-founded in 2015, is far from over. The lawsuit also names Microsoft and OpenAI CEO Sam Altman as defendants.
The suit accuses the organization of straying from its initial non-profit mission to ensure that AI research benefits all humanity.
Despite losing the latest round in court, a federal judge seems to have given Musk and others who opposed OpenAI's conversion to a for-profit model, reasons to be hopeful.
Lawsuit details
Musk's legal action against OpenAI's profit-driven shift
OpenAI was founded as a non-profit in 2015. However, it switched to a "capped-profit" model in 2019 and is now looking to convert again into a public benefit corporation.
Musk had previously sought a preliminary injunction to prevent this transition.
But US District Court Judge Yvonne Gonzalez Rogers denied his request while raising some concerns over OpenAI's proposed shift from non-profit to for-profit status.
Judicial concerns
Judge raises concerns over OpenAI's for-profit shift
In her ruling, Judge Rogers emphasized the potential harm when public funds are used to facilitate a non-profit's transition into a for-profit entity.
This is especially pertinent as OpenAI's non-profit currently maintains a majority stake in its for-profit operations and is set to receive billions of dollars in compensation as part of this transition.
She also noted that several co-founders had made "foundational commitments" not to use OpenAI "as a vehicle to enrich themselves."
Trial acceptance
Musk's legal team welcomes expedited trial offer
Judge Rogers offered an expedited trial in the fall of 2025 to settle disputes related to OpenAI's corporate restructuring.
Marc Toberoff, Musk's attorney, told TechCrunch they were pleased with the judge's decision and confirmed their intention to accept this offer for an expedited trial.
However, OpenAI is yet to reveal if it will also accept this proposal.
Regulatory implications
Legal decision casts doubt over OpenAI's board
The legal decision has sparked concerns over the impact of OpenAI's transition on AI safety.
Tyler Whitmer, a lawyer for Encode, a non-profit that filed an amicus brief in this case, said Judge Rogers's ruling casts a "cloud" of regulatory uncertainty over OpenAI's board of directors.
Attorneys general in California and Delaware are already investigating this transition and may be prompted to conduct deeper investigations based on Judge Rogers's concerns.
Court victories
OpenAI wins some battles in court
OpenAI did score some victories in ruling.
The evidence presented by Musk's team to prove that OpenAI violated a contract by accepting around $44 million in donations from Musk, and then planning to convert into a for-profit entity was deemed "insufficient for purposes of the high burden required for a preliminary injunction."
Further, Judge Rogers found that xAI, Musk's AI company and one of the plaintiffs in this case, failed to demonstrate "irreparable harm" if OpenAI's transition was not halted.