A federal judge in California has denied Elon Musk’s request to block OpenAI’s transition into a for-profit entity, but has allowed Musk’s broader lawsuit against OpenAI, which he co-founded with Sam Altman and others, to continue.
The ruling stated that the plaintiffs “failed to meet their burden of proof for the extraordinary relief requested,” according to a court filing on Tuesday. Founded as a nonprofit AI research lab in 2015, OpenAI has commercialized its technology in recent years, notably with the launch of ChatGPT. The company remains overseen by a nonprofit parent but has faced legal challenges from Musk, who has become one of Altman’s most vocal critics.
In November, Musk, his AI startup xAI, and former OpenAI board member Shivon Zilis sought a preliminary injunction to block OpenAI’s for-profit activities, escalating a legal battle that began in March 2024 when Musk sued for breach of contract and fiduciary duty. The case, initially filed in state court, was later refiled in federal court with expanded claims accusing OpenAI and Microsoft of antitrust violations for allegedly pressuring investors not to fund rival firms like xAI.
Musk has repeatedly criticized OpenAI’s shift toward a for-profit structure, calling it a “total scam” and claiming “OpenAI is evil.” OpenAI has countered by asserting that Musk himself proposed a for-profit model in 2017. The company has stated that its planned restructuring in 2025 will involve creating a public benefit corporation to oversee its commercial ventures, loosening some nonprofit restrictions.
In February, a Musk-led investor group offered $97.4 billion to take control of OpenAI’s nonprofit parent, but Altman dismissed the bid, telling CNBC it was merely an attempt to “slow down a competitor.” Days later, Musk said in a court filing that he would drop his challenge if OpenAI abandoned its transition to a for-profit model.
