Elon Musk’s legal battle against OpenAI’s transition into a for-profit entity faced a setback this week, but a recent court ruling suggests that he may still have a chance to challenge the move. A federal judge in California, Yvonne Gonzalez Rogers, denied Musk’s request for a preliminary injunction to halt OpenAI’s restructuring. However, her ruling raised concerns that could work in Musk’s favor in the long run.
Musk’s lawsuit, which also targets Microsoft and OpenAI’s CEO Sam Altman, argues that OpenAI has abandoned its original nonprofit mission of ensuring AI research benefits humanity. OpenAI, initially founded as a nonprofit in 2015, adopted a “capped-profit” model in 2019 and is now seeking to transition into a public benefit corporation, which has drawn regulatory scrutiny.
Judge Rogers highlighted potential legal and ethical issues surrounding OpenAI’s conversion. She pointed out that using public donations to fund a nonprofit’s shift into a for-profit entity could cause “significant and irreparable harm.” Moreover, she referenced foundational commitments made by OpenAI’s leadership, including Altman and Greg Brockman, that they would not use the organization for personal enrichment.
Musk’s legal team welcomed the judge’s offer for an expedited trial in fall 2025, suggesting that the case is far from over. Meanwhile, OpenAI faces growing regulatory uncertainty, with investigations already underway in California and Delaware.
Despite Musk’s claims, OpenAI secured some legal victories. The judge found that Musk’s evidence of contractual breaches was insufficient for a preliminary injunction. Additionally, she ruled that Musk’s AI company, xAI, failed to demonstrate any direct harm from OpenAI’s restructuring. As OpenAI pushes forward with its transition, the outcome of this legal battle will have significant implications for the future of AI governance and corporate accountability.
