Elon Musk and OpenAI Face Off in Court Over Nonprofit Conversion

Elon Musk and OpenAI Head to Court to Spar Over Nonprofit Conversion

OAKLAND, Calif. (Reuters) - - Lawyers for Elon Musk and ChatGPT maker OpenAI are set to butt heads in the courtroom on Tuesday as a judge will hear arguments on Musk's lawsuit to halt OpenAI's conversion to a for-profit entity. Musk's request to block OpenAI's conversion is the latest move in a grudge match between the world's richest person and OpenAI CEO Sam Altman that is playing out publicly in court. The hearing will take place at a U.S. federal court in the Northern District of California. Musk cofounded OpenAI with Altman in 2015, but left before the company took off and subsequently founded the competing AI startup xAI in 2023. OpenAI is now trying to transition from a nonprofit into a for-profit entity, which it says it needs to do to secure the capital required to develop the best artificial intelligence models. Last year, Musk filed a lawsuit against OpenAI and Altman, saying that OpenAI's founders originally approached him to fund a nonprofit focused on developing AI to benefit humanity, but that it is now focused on making money. He later expanded the lawsuit to add federal antitrust and other claims, and in December asked the judge presiding over the case to stop OpenAI from transitioning to a for-profit. In response to Musk's lawsuit, OpenAI has said it will move to dismiss Musk's claims and that Musk "should be competing in the marketplace rather than the courtroom." The stakes on OpenAI's corporate transition have now escalated, as OpenAI's last fundraising round of $6.6 billion and a new round of up to $25 billion under discussion with SoftBank are conditioned on the company restructuring to remove the nonprofit's control. Such a restructuring would be highly unusual, said Rose Chan Loui, executive director of the UCLA Law Center for Philanthropy and Nonprofits. Nonprofit conversions to for-profits have historically been for health care organizations like hospitals, not venture capital-backed companies, she said. (Reporting by Anna Tong in Oakland; Editing by Marguerita Choy)

Elon Musk and OpenAI head to court to spar over nonprofit conversion

OAKLAND, Calif. (Reuters) - - Lawyers for Elon Musk and ChatGPT maker OpenAI are set to butt heads in the courtroom on Tuesday as a judge will hear arguments on Musk's lawsuit to halt OpenAI's conversion to a for-profit entity. Musk's request to block OpenAI's conversion is the latest move in a grudge match between the world's richest person and OpenAI CEO Sam Altman that is playing out publicly in court. The hearing will take place at a U.S. federal court in the Northern District of California. Musk cofounded OpenAI with Altman in 2015, but left before the company took off and subsequently founded the competing AI startup xAI in 2023. OpenAI is now trying to transition from a nonprofit into a for-profit entity, which it says it needs to do to secure the capital required to develop the best artificial intelligence models. Last year, Musk filed a lawsuit against OpenAI and Altman, saying that OpenAI's founders originally approached him to fund a nonprofit focused on developing AI to benefit humanity, but that it is now focused on making money. He later expanded the lawsuit to add federal antitrust and other claims, and in December asked the judge presiding over the case to stop OpenAI from transitioning to a for-profit. In response to Musk's lawsuit, OpenAI has said it will move to dismiss Musk's claims and that Musk "should be competing in the marketplace rather than the courtroom." The stakes on OpenAI's corporate transition have now escalated, as OpenAI's last fundraising round of $6.6 billion and a new round of up to $25 billion under discussion with SoftBank are conditioned on the company restructuring to remove the nonprofit's control. Such a restructuring would be highly unusual, said Rose Chan Loui, executive director of the UCLA Law Center for Philanthropy and Nonprofits. Nonprofit conversions to for-profits have historically been for health care organizations like hospitals, not venture capital-backed companies, she said. (Reporting by Anna Tong in Oakland; Editing by Marguerita Choy)

Elon Musk and OpenAI head to court to spar over nonprofit conversion

OAKLAND, Calif., Feb 4 (Reuters) - - Lawyers for Elon Musk and ChatGPT maker OpenAI are set to butt heads in the courtroom on Tuesday as a judge will hear arguments on Musk's lawsuit to halt OpenAI's conversion to a for-profit entity. Musk's request to block OpenAI's conversion is the latest move in a grudge match between the world's richest person and OpenAI CEO Sam Altman that is playing out publicly in court. The hearing will take place at a U.S. federal court in the Northern District of California. Musk cofounded OpenAI with Altman in 2015, but left before the company took off and subsequently founded the competing AI startup xAI in 2023. OpenAI is now trying to transition from a nonprofit into a for-profit entity, which it says, opens new tab it needs to do to secure the capital required to develop the best artificial intelligence models. Last year, Musk filed a lawsuit against OpenAI and Altman, saying that OpenAI's founders originally approached him to fund a nonprofit focused on developing AI to benefit humanity, but that it is now focused on making money. He later expanded the lawsuit to add federal antitrust and other claims, and in December asked the judge presiding over the case to stop OpenAI from transitioning to a for-profit. In response to Musk's lawsuit, OpenAI has said it will move to dismiss Musk's claims and that Musk "should be competing in the marketplace rather than the courtroom." The stakes on OpenAI's corporate transition have now escalated, as OpenAI's last fundraising round, opens new tabof $6.6 billion and a new round of up to $25 billion under discussion with SoftBank (9984.T), opens new tab are conditioned on the company restructuring to remove the nonprofit's control. Such a restructuring would be highly unusual, said Rose Chan Loui, executive director of the UCLA Law Center for Philanthropy and Nonprofits. Nonprofit conversions to for-profits have historically been for health care organizations like hospitals, not venture capital-backed companies, she said. Reporting by Anna Tong in Oakland Editing by Marguerita Choy Our Standards: The Thomson Reuters Trust Principles., opens new tab Suggested Topics:Artificial Intelligence

Judge says Elon Musk's claims of harm from OpenAI are a 'stretch' but welcomes possible trial

OAKLAND, Calif. -- Elon Musk's lawyers faced off with OpenAI in court Tuesday as a federal judge weighed the billionaire's request for a court order that would block the ChatGPT maker from converting itself to a for-profit company. U.S. District Judge Yvonne Gonzalez Rogers said it was a "stretch" for Musk to claim he will be irreparably harmed if she doesn't intervene to stop OpenAI from moving forward with its transition from a nonprofit research laboratory to a for-profit corporation. But the judge also raised concerns about OpenAI and its relationship with business partner Microsoft and said she wouldn't stop the case from moving to trial as soon as next year so a jury can decide. "It is plausible that what Mr. Musk is saying is true. We'll find out. He'll sit on the stand," she said. Musk, an early OpenAI investor and board member, sued the artificial intelligence company last year, first in a California state court and later in federal court, alleging it had betrayed its founding aims as a nonprofit research lab benefiting the public good. Musk had invested about $45 million in the startup from its founding until 2018, his lawyer said Tuesday. Musk escalated the legal dispute late last year, adding new claims and defendants and asking for a court order that would stop OpenAI's plans to convert itself into a for-profit business more fully. Musk also added his own AI company, xAI, as a plaintiff. Also targeted by Musk's lawsuit is OpenAI's close business partner Microsoft and tech entrepreneur Reid Hoffman, a former OpenAI board member who also sits on Microsoft's board. Gonzalez Rogers said she has a high bar for approving the kind of preliminary injunction that Musk wants but hasn't yet ruled on the request. She has handled a number of tech industry cases including Apple's fight with Epic Games, though she said Tuesday that Musk's case is "nothing like" that one. Then-President Barack Obama appointed her to the federal bench in 2011. Tuesday's hearing was originally set for January but was postponed after Musk's attorney Marc Toberoff said his house was destroyed in the Pacific Palisades wildfire. Musk, who did not attend the hearing, has alleged in the lawsuit that the companies are violating the terms of his foundational contributions to the charity. OpenAI has said Musk's requested court order would "debilitate OpenAI's business" and mission to the advantage of Musk and his own AI company and is based on "far-fetched" legal claims. At the heart of the dispute is a 2017 internal power struggle at the fledgling startup that led to Altman becoming OpenAI's CEO. He had also sought to be CEO and grew frustrated after two other OpenAI co-founders said he would hold too much power as a major shareholder and chief executive if the startup succeeded in its goal to achieve better-than-human AI known as artificial general intelligence, or AGI. Musk has long voiced concerns about how advanced forms of AI could threaten humanity. Altman eventually succeeded in becoming CEO and has remained so except for a period in 2023 when he was fired and then reinstated days later after the board that ousted him was replaced. OpenAI has sought to demonstrate Musk's early support for the idea of making OpenAI a for-profit business so it could raise money for the hardware and computer power that AI needs. Musk is not the only one challenging OpenAI's for-profit transition. Facebook and Instagram parent Meta Platforms has asked California's attorney general to block it, and the office of Delaware's attorney general has said it is reviewing the conversion. The Associated Press and OpenAI have a licensing and technology agreement that allows OpenAI access to part of AP's text archives.

Judge says Elon Musk's claims of harm from OpenAI are a 'stretch' but welcomes possible trial

OAKLAND, Calif. (AP) -- Elon Musk's lawyers faced off with OpenAI in court Tuesday as a federal judge weighed the billionaire's request for a court order that would block the ChatGPT maker from converting itself to a for-profit company. U.S. District Judge Yvonne Gonzalez Rogers said it was a "stretch" for Musk to claim he will be irreparably harmed if she doesn't intervene to stop OpenAI from moving forward with its transition from a nonprofit research laboratory to a for-profit corporation. But the judge also raised concerns about OpenAI and its relationship with business partner Microsoft and said she wouldn't stop the case from moving to trial as soon as next year so a jury can decide. "It is plausible that what Mr. Musk is saying is true. We'll find out. He'll sit on the stand," she said. Musk, an early OpenAI investor and board member, sued the artificial intelligence company last year, first in a California state court and later in federal court, alleging it had betrayed its founding aims as a nonprofit research lab benefiting the public good. Musk had invested about $45 million in the startup from its founding until 2018, his lawyer said Tuesday. Musk escalated the legal dispute late last year, adding new claims and defendants and asking for a court order that would stop OpenAI's plans to convert itself into a for-profit business more fully. Musk also added his own AI company, xAI, as a plaintiff. Also targeted by Musk's lawsuit is OpenAI's close business partner Microsoft and tech entrepreneur Reid Hoffman, a former OpenAI board member who also sits on Microsoft's board. Gonzalez Rogers said she has a high bar for approving the kind of preliminary injunction that Musk wants but hasn't yet ruled on the request. She has handled a number of tech industry cases including Apple's fight with Epic Games, though she said Tuesday that Musk's case is "nothing like" that one. Then-President Barack Obama appointed her to the federal bench in 2011. Tuesday's hearing was originally set for January but was postponed after Musk's attorney Marc Toberoff said his house was destroyed in the Pacific Palisades wildfire. Musk, who did not attend the hearing, has alleged in the lawsuit that the companies are violating the terms of his foundational contributions to the charity. OpenAI has said Musk's requested court order would "debilitate OpenAI's business" and mission to the advantage of Musk and his own AI company and is based on "far-fetched" legal claims. At the heart of the dispute is a 2017 internal power struggle at the fledgling startup that led to Altman becoming OpenAI's CEO. He had also sought to be CEO and grew frustrated after two other OpenAI co-founders said he would hold too much power as a major shareholder and chief executive if the startup succeeded in its goal to achieve better-than-human AI known as artificial general intelligence, or AGI. Musk has long voiced concerns about how advanced forms of AI could threaten humanity. Altman eventually succeeded in becoming CEO and has remained so except for a period in 2023 when he was fired and then reinstated days later after the board that ousted him was replaced. OpenAI has sought to demonstrate Musk's early support for the idea of making OpenAI a for-profit business so it could raise money for the hardware and computer power that AI needs. Musk is not the only one challenging OpenAI's for-profit transition. Facebook and Instagram parent Meta Platforms has asked California's attorney general to block it, and the office of Delaware's attorney general has said it is reviewing the conversion. The Associated Press and OpenAI have a licensing and technology agreement that allows OpenAI access to part of AP's text archives.

Elon Musk, Sam Altman's OpenAI head to court in fight over for-profit...

Lawyers for Elon Musk on Tuesday asked a federal judge to block Sam Altman-led OpenAI's controversial plan to become a for-profit entity during a highly anticipated court hearing. The legal push is part of a broader amended lawsuit in which Musk has accused OpenAI and key investor Microsoft of violating federal antitrust law in an illegal bid to dominate the AI marketplace. Musk is seeking an injunction in US federal court in Oakland In the lawsuit, Musk's lawyers also accuse Altman and OpenAI of abandoning the original goal of developing AI to benefit humanity while transforming from a "tax-exempt charity to a $157 billion for-profit, market-paralyzing gorgon." Musk claims that both he and the public have suffered irreparable harm as a result and argues that OpenAI and Microsoft should be forced to divest any "ill-gotten" gains. OpenAI has sought to dismiss the lawsuit, referring to Musk's claims as "baseless" and accused the world's richest person of engaging in an "increasingly blusterous campaign to harass OpenAI for his own competitive advantage." The court fight is part of a months-long slugfest between Musk and Altman - who once collaborated to co-found OpenAI but have since become bitter rivals. Musk runs xAI, which directly competes with OpenAI. As The Post reported, Musk gained an edge in the legal battle last month after the Justice Department and FTC sided with one of his lawsuit's key arguments against OpenAI, Microsoft and billionaire Reid Hoffman, who are all listed as defendants. Musk argued that OpenAI and Microsoft violated the Clayton Act by allowing Hoffman and another executive, Deannah Templeton, to simultaneously serve on the boards of OpenAI and Microsoft. Section 8 of the Clayton Act prohibits so-called "interlocking directorates. The DOJ and FTC said they agreed with Musk's legal argument. Outside of the lawsuit, Musk and Altman recently traded barbs on social media after Musk threw shade on Altman's plans to collaborate with Oracle executive chairman Larry Ellison and Softbank CEO Masayoshi Son on President Trump's $500 billion "Stargate" AI infrastructure project. Musk isn't the only entity fighting to block OpenAI's plans. In December, Mark Zuckerberg-led Meta warned in a letter to California Attorney General Rob Bonta that allowing OpenAI to become a for-profit would have "seismic implications for Silicon Valley." "OpenAI should not be allowed to flout the law by taking and re-appropriating assets it built as a charity and using them for potentially enormous private gains," Meta wrote in the letter.

Judge Says Elon Musk's Claims of Harm From OpenAI Are a 'Stretch' but Welcomes Possible Trial

OAKLAND, Calif. (AP) -- Elon Musk's lawyers faced off with OpenAI in court Tuesday as a federal judge weighed the billionaire's request for a court order that would block the ChatGPT maker from converting itself to a for-profit company. U.S. District Judge Yvonne Gonzalez Rogers said it was a "stretch" for Musk to claim he will be irreparably harmed if she doesn't intervene to stop OpenAI from moving forward with its transition from a nonprofit research laboratory to a for-profit corporation. But the judge also raised concerns about OpenAI and its relationship with business partner Microsoft and said she wouldn't stop the case from moving to trial as soon as next year so a jury can decide. "It is plausible that what Mr. Musk is saying is true. We'll find out. He'll sit on the stand," she said. Musk, an early OpenAI investor and board member, sued the artificial intelligence company last year, first in a California state court and later in federal court, alleging it had betrayed its founding aims as a nonprofit research lab benefiting the public good. Musk had invested about $45 million in the startup from its founding until 2018, his lawyer said Tuesday. Musk escalated the legal dispute late last year, adding new claims and defendants and asking for a court order that would stop OpenAI's plans to convert itself into a for-profit business more fully. Musk also added his own AI company, xAI, as a plaintiff. Also targeted by Musk's lawsuit is OpenAI's close business partner Microsoft and tech entrepreneur Reid Hoffman, a former OpenAI board member who also sits on Microsoft's board. Gonzalez Rogers said she has a high bar for approving the kind of preliminary injunction that Musk wants but hasn't yet ruled on the request. She has handled a number of tech industry cases including Apple's fight with Epic Games, though she said Tuesday that Musk's case is "nothing like" that one. Then-President Barack Obama appointed her to the federal bench in 2011. Tuesday's hearing was originally set for January but was postponed after Musk's attorney Marc Toberoff said his house was destroyed in the Pacific Palisades wildfire. Musk, who did not attend the hearing, has alleged in the lawsuit that the companies are violating the terms of his foundational contributions to the charity. OpenAI has said Musk's requested court order would "debilitate OpenAI's business" and mission to the advantage of Musk and his own AI company and is based on "far-fetched" legal claims. At the heart of the dispute is a 2017 internal power struggle at the fledgling startup that led to Altman becoming OpenAI's CEO. He had also sought to be CEO and grew frustrated after two other OpenAI co-founders said he would hold too much power as a major shareholder and chief executive if the startup succeeded in its goal to achieve better-than-human AI known as artificial general intelligence, or AGI. Musk has long voiced concerns about how advanced forms of AI could threaten humanity. Altman eventually succeeded in becoming CEO and has remained so except for a period in 2023 when he was fired and then reinstated days later after the board that ousted him was replaced. OpenAI has sought to demonstrate Musk's early support for the idea of making OpenAI a for-profit business so it could raise money for the hardware and computer power that AI needs. Musk is not the only one challenging OpenAI's for-profit transition. Facebook and Instagram parent Meta Platforms has asked California's attorney general to block it, and the office of Delaware's attorney general has said it is reviewing the conversion. The Associated Press and OpenAI have a licensing and technology agreement that allows OpenAI access to part of AP's text archives. Copyright 2025 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

'Billionaires versus billionaires': OpenAI feud between Elon Musk, Sam Altman faces federal judge

Elon Musk and Sam Altman's feud over OpenAI made its way to court Tuesday.Getty Images A federal judge weighed in Tuesday on a long-brewing legal feud between billionaires Elon Musk and Sam Altman over OpenAI, the company they co-founded, suggesting she's unlikely to halt the company's plan to restructure for now. Musk, a top ally to President Donald Trump and CEO of Tesla and SpaceX, is looking to stop the Microsoft-backed artificial intelligence AI developer from becoming a for-profit company. He has accused OpenAI of becoming a "closed source, profit-maximizer," and he sued the company last year, first in a California court and later in federal court. In a courtroom in Oakland, California, on Tuesday, U.S. District Judge Yvonne Gonzalez Rogers said that "it is a stretch [for Musk] to claim irreparable harm in this case," adding that it's a battle of "billionaires versus billionaires." Musk is requesting a preliminary injunction, which would stall OpenAI's conversion. Gonzalez Rogers didn't immediately rule on the matter. Musk, who didn't appear at the hearing Tuesday, was among a handful of co-founders of OpenAI in 2015. He invested $45 million in the startup between then and 2018, his lawyer said Tuesday. But he and Altman had a falling out, with much of their feud publicly playing out online. In 2023, Musk launched xAI -- his own rival to OpenAI -- further escalating the tension between them. Musk added xAI as a plaintiff in the case last year. U.S. companies continue to rush to invest in AI infrastructure and development, alongside recent innovations from China that have shaken AI developers and investors alike. Last month, Altman joined Trump at the White House, where Trump announced a $500 billion AI infrastructure project dubbed "Stargate." An attorney for Musk accused OpenAI and Microsoft of improperly agreeing to limit competition, effectively creating monopoly-like conditions that would violate the Sherman Antitrust Act. OpenAI's attorneys denied the existence of any such agreement. OpenAI is "a charity where a tiny trickle goes to the charity. It all goes to the for-profit enterprise," Musk's attorney Marc Toberoff said. "When you look at that, it's a cumulative effect in a nascent industry where OpenAI -- already with 70% of the market, in conjunction with Microsoft -- is seeking to strangle their competitors in the crib." OpenAI began its operations as a nonprofit research lab before it transitioned to a so-called capped profit model in 2019, which allowed it to function more like a startup, with the nonprofit arm controlling its for-profit arm. In December, the company announced it would pivot toward a new for-profit structure this year, which entails creating a public benefit corporation -- a type of for-profit company that aims to make a "positive impact" on society -- to raise more capital to compete with the "hundreds of⁠ billions of⁠ dollars that major companies are now investing into AI development." For OpenAI, that "public benefit" mission is the pursuit of artificial general intelligence, or the possibility of building AI that can essentially think for itself. Still, others in tech have also expressed opposition to OpenAI's conversion to a for-profit entity. Meta, which owns Facebook and Instagram, reportedly sent California Attorney General Rob Bonta a letter in December asking the state to block it from doing so, according to The Wall Street Journal. In December, the nonprofit AI safety organization Encode backed Musk's suit in a statement. Sarah Eddy, an attorney for OpenAI, stood by the company's decision, telling the judge that it would be "economically irrational for investors to invest only in OpenAI, even if that were happening." "There are plenty of reasons ... for investors to be selecting one investment vehicle rather than the other," she said Tuesday. OpenAI's attorneys also argued that Musk previously supported its becoming a for-profit entity. Last year, OpenAI alleged that Musk agreed in late 2017 that the "next step for the mission was to create a for-profit entity," adding that he wanted "majority equity, initial board control, and to be CEO." Later, when Musk sued OpenAI, it released emails that purport to show Musk telling Altman and several others: "Even raising several hundred million won't be enough. This needs billions per year immediately or forget it." Musk hasn't publicly addressed OpenAI's allegations. Gonzalez Rogers said Musk can present his arguments to a jury when the case goes to trial. "I don't know what happened, but I certainly am not throwing something out on a motion to dismiss when it is plausible that what Mr. Musk is saying is true," she said. "We'll find out, he'll sit on the stand, he'll present it to a jury. A jury will decide who is right. So something's going to trial."

Judge says Elon Musk's claims of harm from OpenAI are a 'stretch' but welcomes possible trial

The judge expressed concerns about OpenAI's relationship with business partner Microsoft and decided not to block the case from going to trial next year for a jury to decide. "It is plausible that what Mr. Musk is saying is true. We'll find out. He'll sit on the stand," she said.Elon Musk's lawyers faced off with OpenAI in court Tuesday as a federal judge weighed the billionaire's request for a court order that would block the ChatGPT maker from converting itself to a for-profit company. US District Judge Yvonne Gonzalez Rogers said it was a "stretch" for Musk to claim he will be irreparably harmed if she doesn't intervene to stop OpenAI from moving forward with its transition from a nonprofit research laboratory to a for-profit corporation. But the judge also raised concerns about OpenAI and its relationship with business partner Microsoft and said she wouldn't stop the case from moving to trial as soon as next year so a jury can decide. "It is plausible that what Mr. Musk is saying is true. We'll find out. He'll sit on the stand," she said. Musk, an early OpenAI investor and board member, sued the artificial intelligence company last year, first in a California state court and later in federal court, alleging it had betrayed its founding aims as a non-profit research lab benefiting the public good. Musk had invested about $45 million in the startup from its founding until 2018, his lawyer said Tuesday. Musk escalated the legal dispute late last year, adding new claims and defendants and asking for a court order that would stop OpenAI's plans to convert itself into a for-profit business more fully. Musk also added his own AI company, xAI, as a plaintiff. Also targeted by Musk's lawsuit is OpenAI's close business partner Microsoft and tech entrepreneur Reid Hoffman, a former OpenAI board member who also sits on Microsoft's board. Gonzalez Rogers said she has a high bar for approving the kind of preliminary injunction that Musk wants but hasn't yet ruled on the request. She did say she had "significant concerns" with two people connected to Microsoft on OpenAI's board - Hoffman and longtime Microsoft executive Deanna Templeton, who was a "non-voting observer." "So you want me to believe that she was sitting there listening to all the discussions and not telling anybody? What would the point be for her to sit there and listen to everybody, if not to communicate what she was listening? There would be no point for her to be there, which is why she actually should not be there," she said. Hoffman, a co-founder of LinkedIn, has been on Microsoft's board since shortly after the tech giant bought the job networking site. He stepped down from OpenAI's board in 2023 to avoid conflicts with his AI startup, Inflection. Templeton, who Musk also named as a defendant, was added as a non-voting member of OpenAI's board in the aftermath of Altman's ouster after Microsoft CEO Satya Nadella sought more stability on the board. But months later, she was dropped from the OpenAI board as US antitrust enforcers were expressing concerns about such arrangements on corporate boards. The judge has handled a number of tech industry cases including Apple's fight with Epic Games, though she said Tuesday that Musk's case is "nothing like" that one. That case was also the last time she granted a preliminary injunction, in 2020, eight months before the case went to trial. Then-President Barack Obama appointed Gonzalez Rogers to the federal bench in 2011. Tuesday's hearing was originally set for January but was postponed after Musk's attorney Marc Toberoff said his house was destroyed in the Pacific Palisades wildfire. Musk, who did not attend the hearing, has alleged in the lawsuit that the companies are violating the terms of his foundational contributions to the charity. Judge Gonzalez Rogers called it a "stretch" to claim "irreparable harm" to Musk, and called the case "billionaires vs. billionaires." She questioned why Musk invested tens of millions in OpenAI without a written contract. Toberoff said it was because the relationship between Altman and Musk at the time was "built on trust" and the two were very close. "That is just a lot of money" to invest "on a handshake," the judge said. OpenAI has said Musk's requested court order would "debilitate OpenAI's business" and mission to the advantage of Musk and his own AI company and is based on "far-fetched" legal claims. At the heart of the dispute is a 2017 internal power struggle at the fledgling startup that led to Altman becoming OpenAI's CEO. Emails disclosed by OpenAI show Musk had also sought to be CEO and grew frustrated after two other OpenAI co-founders said he would hold too much power as a major shareholder and chief executive if the startup succeeded in its goal to achieve better-than-human AI known as artificial general intelligence, or AGI. Musk has long voiced concerns about how advanced forms of AI could threaten humanity. Altman eventually succeeded in becoming CEO and has remained so except for a period in 2023 when he was fired and then reinstated days later after the board that ousted him was replaced. OpenAI has sought to demonstrate Musk's early support for the idea of making OpenAI a for-profit business so it could raise money for the hardware and computer power that AI needs. Musk is not the only one challenging OpenAI's for-profit transition. Facebook and Instagram parent Meta Platforms has asked California's attorney general to block it, and the office of Delaware's attorney general has said it is reviewing the conversion. It was not clear Tuesday when the case might go to trial. Musk's lawyers initially said they would be ready by June after some back-and-forth with the two sides the judge indicated it probably won't be until June 2026 at the earliest, but likely early 2027.

Musk, OpenAI Set to Clash in Court Over Startup's Restructuring

Elon Musk is stepping up his efforts to block OpenAI from restructuring as a for-profit company after it received billions of dollars from investors, including early funding from him. At a court hearing Tuesday, Musk's lawyers will urge a federal judge to halt OpenAI's conversion plans while he tries to prove that his fellow co-founder Sam Altman abandoned their public-spirited mission of a decade ago in a quest to get rich off artificial intelligence.

Musk vs OpenAI Suit Could Be Headed for Trial | PYMNTS.com

And if and when that happens, the world's richest man would have to appear in court and testify, Reuters reported Tuesday (Feb. 4). Musk, who was involved in the founding of the artificial intelligence (AI) leader, is suing to keep the company from becoming a for-profit entity. In court Tuesday, U.S. District Judge Yvonne Gonzalez Rogers said parts of the case can move forward. "Something is going to trial in this case," Rogers said. "[Elon Musk will] sit on the stand, present it to a jury, and a jury will decide who is right." According to the report, the judge had been weighing Musk's recent request for a preliminary injunction to prevent OpenAI's conversion before going to trial. Musk helped OpenAI CEO Sam Altman found the company in 2015 but left before the startup began to make a name for itself. Musk has since launched rival AI firm xAI, and has argued that OpenAI's switch to a for-profit company goes against its original mission. Musk later expanded his suit to include federal antitrust and other claims, and in December asked the judge handling the case to prevent OpenAI's transition to a for-profit. OpenAI says the switch is necessary to help it land the types of investments it needs to develop the best AI models. The company has said it would try to dismiss Musk's claims and that Musk "should be competing in the marketplace rather than the courtroom." Reuters said the stakes here have escalated, as the company's $6.6 billion funding round last year and a new round of up to $25 billion under discussion with SoftBank are dependent on OpenAI's restructuring to remove the nonprofit's control. That sort of transformation and restructuring would be highly unusual, Rose Chan Loui, executive director of the UCLA Law Center for Philanthropy and Nonprofits, told Reuters. Typically, nonprofit to for-profit conversations involve healthcare organizations, not venture-backed companies. In other recent OpenAI news, the company this weekend debuted an AI tool dubbed "deep research" which the company says is capable of carrying out multistep online research and "accomplishes in tens of minutes what would take a human many hours." Using a version of OpenAI's upcoming o3 AI model that is designed for web browsing and data analysis, deep research will employ the company's ChatGPT chatbot to find, analyze and synthesize online sources such as images, text and PDFs to create a report.

OpenAI, Microsoft file motion to dismiss Musk's lawsuit

Lawyers argue 105-page complaint 'fails at its one job: to plead facts that state a claim Elon Musk's legal grudge against Sam Altman, OpenAI, and Microsoft could soon be over - again - if a California judge responds favorably to the latest filings in the case. Both OpenAI [PDF] and Microsoft [PDF] filed motions to dismiss Musk's lawsuit last week, arguing that his second attempt to sue the company, filed in August in California federal court after he inexplicably withdrew a nearly identical case in California Superior Court in June, wasn't worth the fees to file it. "Musk asserted claims, withdrew them, then reasserted them in a new forum, dressed up in new theories, advanced by new lawyers: he sued in state court, then in federal court; he disclaimed a competitive motive, then named his own company as an antitrust plaintiff," OpenAI explained in its motion. "The complaint lurches from theory to theory, distorts its own exhibits, and trades from start to finish on fact-free and often ad hominem conclusions." "Musk's pleading is a grudge in search of a lawsuit," OpenAI's lawyers added. "And for all its 105 pages, it fails at its one job: to plead facts that state a claim." The kerfuffle started in March 2024 when Musk sued the company for breaching its contracts, engaging in unfair business practices, and failing in its fiduciary duties by intermingling itself with Microsoft and creating a for-profit wing. OpenAI responded by going public with a bundle of emails between OpenAI and Musk going back to 2015 when the DOGE daddy teamed up with Altman, Greg Brockman, and others to form the company. According to OpenAI's presentation of the emails, Musk wanted control of OpenAI. When he didn't get his way, he split with the company in 2018. Musk dropped the suit a few months later, though without explaining why. Fast-forward to today, OpenAI is claiming that both Musk's first and second lawsuits, and an amended complaint filed in November that adds Microsoft to the mix, are baseless attempts to make his own AI firm, xAI, more competitive. "Boiled all the way down, the complaint asks the Court to intervene in Plaintiffs' favor to improve their position in an intensely competitive industry," OpenAI's lawyers argued. "In 2023, Musk launched a competing AI business - xAI. He has been suing OpenAI ever since, to undermine a successful competitor and advance his own commercial interests." Microsoft argued much the same, describing Musk's 26-count lawsuit against it, OpenAI, and multiple named individuals as a "scattershot" attempt "to slow Microsoft and OpenAI down" that fails to land on a single count. "The [amended complaint] is devoid of factual specificity and substantiation, repeatedly relying on unsupported 'information and belief,'" Microsoft's legal team said. "All claims against the Microsoft Defendants lack the necessary factual or legal support." Microsoft further argued that it shouldn't be party to the whole mess since the complaint was all about OpenAI's founding, in which it wasn't involved. The filings from Microsoft and OpenAI come after Musk's legal team asked for a preliminary injunction in the case in December as OpenAI began laying out a case for transforming itself into a public benefit corporation, in essence furthering its push toward life as a for-profit company. California Northern District Court judge Yvonne Gonzalez Rogers has yet to rule on the injunction request, with a hearing on the matter set for later today. None of the parties involved in the lawsuit, or their legal representatives, responded to questions for this story. ®