OpenAI CEO Sam Altman speaks at a panel discussion on potentials, perspectives and challenges in the age of Artificial Intelligence (AI) at the Technical University (TU) in Berlin on February 7, 2025.
John Macdougall | Afp | Getty Images
A federal judge in California denied Elon Musk’s effort to halt OpenAI’s transformation into a for-profit entity, according to a filing on Tuesday.
The court said the plaintiffs “failed to meet their burden of proof for the extraordinary relief requested.” However, other aspects of Musk’s lawsuit against the artificial intelligence startup that he co-founded with Sam Altman and others can proceed, the filing said.
OpenAI, which was created as a nonprofit AI research lab in 2015, has been commercializing products in recent years, most notably its viral ChatGPT chatbot. The company is still overseen by a nonprofit parent and has faced significant hurdles in its goal to restructure into a for-profit, due largely to Musk, who has become one of Altman’s chief adversaries.
In November, attorneys representing Musk, his startup xAI, and former OpenAI board member Shivon Zilis filed for a preliminary injunction against the company’s for-profit pursuits. The request marked an escalation in the legal feud between the sides that started when Musk sued OpenAI in March 2024 for breach of contract and fiduciary duty.
The case was eventually withdrawn from state court and refiled in federal court, with Musk expanding the complaint to include claims that Microsoft and OpenAI had violated antitrust laws when the ChatGPT maker allegedly asked investors to agree to not invest in rival companies, including xAI.
In posts on X, Musk has described OpenAI’s efforts to convert to a for-profit corporation as a “total scam” and claimed that “OpenAI is evil.” In December, OpenAI clapped back, alleging that in 2017 Musk “not only wanted, but actually created, a for-profit” to serve as the company’s proposed new structure.
OpenAI also said in December that in moving toward a new for-profit structure in 2025, the company would create a public benefit corporation to oversee commercial operations, removing some of its nonprofit restrictions and allowing it to function more like a high-growth startup.
“The hundreds of billions of dollars that major companies are now investing into AI development show what it will really take for OpenAI to continue pursuing the mission,” OpenAI’s board wrote in a post at the time.
Last month, a Musk-led investor group offered to buy control of OpenAI for $97.4 billion. The offer was for the nonprofit overseeing the company.
“It’s time for OpenAI to return to the open-source, safety-focused force for good it once was,” Musk’s attorney, Marc Toberoff, said in a statement following the bid.
Altman rebuffed the offer, telling CNBC that the move is just an effort by Musk to “slow down a competitor.”
Musk said in a court filing a few days later that he would withdraw his effort if OpenAI stops its conversion into a for-profit entity.
