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OpenAI and Microsoft failed to escape a trial over Elon Musk\u2019s claims that Sam Altman\u2019s startup betrayed its founding mission as a public charity when it took billions in funding from the software giant and made plans to operate as a for-profit business.<\/p>\n
A federal judge in Oakland, California, on Thursday rejected requests by OpenAI and Microsoft to dismiss claims by Musk and ordered the case to proceed to a jury trial set for late April. Musk helped Altman and others launch OpenAI in 2015 and went on to found his own artificial intelligence company in 2023.<\/p>\n
\u201cMr. Musk\u2019s lawsuit continues to be baseless and a part of his ongoing pattern of harassment, and we look forward to demonstrating this at trial,\u201d OpenAI said in a statement. \u201cWe remain focused on empowering the OpenAI Foundation, which is already one of the best resourced nonprofits ever.\u201d<\/p>\n
In her ruling, US District Judge Yvonne Gonzalez Rogers refused to throw out Musk\u2019s accusation that OpenAI breached its promise to operate as a charitable trust.<\/p>\n
She wrote that while the evidence is unclear, Musk claims that his contributions to OpenAI \u201chad a specific charitable purpose and that he attached two fundamental terms to it: that OpenAI be open source and that it would remain a nonprofit purposes consistent with OpenAI\u2019s charter and mission.\u201d<\/p>\n
Rejecting an argument by OpenAI, the judge found that Musk\u2019s use of an intermediary to donate $38 million in seed money to the startup doesn\u2019t strip him of legal standing to try to enforce those conditions.<\/p>\n
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\u201cHolding otherwise would significantly reduce the enforcement of a large swath of charitable trusts, contrary to the modern trend,\u201d she wrote.<\/p>\n
The judge also refused to toss out Musk\u2019s fraud allegations, pointing to emails and private notes of OpenAI co-founder Greg Brockman in 2017. In an email that September, he told Musk he would \u201clike to continue with the non-profit structure\u201d of OpenAI.<\/p>\n
According to the ruling, two months later, in a private note, he wrote: \u201ccannot say that we are committed to the non-profit. don\u2019t want to say that we\u2019re committed. if three months later we\u2019re doing b-corp then it was a lie.\u201d<\/p>\n
Gonzalez Rogers said it will be up to the jury to decide whether Microsoft helped OpenAI breach its responsibilities to donors, like Musk.<\/p>\n
\u201cHere, Musk identified considerable evidence raising a triable issue of fact that Microsoft had actual knowledge beyond vague suspicion of wrongdoing,\u201d she wrote.<\/p>\n
But the judge rejected Musk\u2019s claim that Microsoft \u201cunjustly\u201d enriched itself at his expense. In order to do so, Musk would have had at least a \u201cquasi-contractual relationship\u201d with Microsoft, she said.<\/p>\n
\u201cNor did Musk cite any evidence or allege any facts to support finding that Microsoft\u2019s retention of any benefit was unjust,\u201d the judge wrote.<\/p>\n
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Musk\u2019s lawyer, Marc Toberoff, and representatives of Microsoft didn\u2019t immediately respond to requests for comment.<\/p>\n
OpenAI, the maker of ChatGPT recently valued at $500 billion, announced its restructuring in October. It said at the time that it had given a 27% ownership stake to its longtime backer Microsoft in a transition that will keep the startup\u2019s nonprofit arm in control of its for-profit operations.<\/p>\n
The transition of OpenAI to a public benefit corporation fulfilled Altman\u2019s long-held objective as its chief executive officer.<\/p>\n
Musk and Altman, one-time business partners turned bitter foes, have feuded in court over the future of OpenAI since 2024. Musk\u2019s xAI has become one of OpenAI\u2019s main rivals. Last year, OpenAI rejected Musk\u2019s unsolicited bid to acquire the assets of the nonprofit that controls the company for $97.4 billion.<\/p>\n
Altman has denounced Musk\u2019s lawsuit challenging the OpenAI restructuring as a weaponisation of the legal system to slow down a competitor.<\/p>\n
\u00a9 2026 Bloomberg<\/p>\n
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