A US judge ruled on Tuesday against Elon Musk’s attempt to prevent OpenAI from transitioning into a for-profit business, a setback for the Tesla mogul amid his ongoing feud with OpenAI CEO Sam Altman.
US District Court Judge Yvonne Gonzalez Rogers determined that Musk and his xAI startup failed to demonstrate the need for an injunction against OpenAI’s plans, paving the way for the company to proceed with its transition. The case is set to go to trial later this year.
Musk had filed a lawsuit in California federal court to stop OpenAI from shifting its structure, arguing that the move violated antitrust laws and betrayed the trust he placed in the organization as one of its co-founders.
The judge noted that while Musk’s case for an injunction was unconvincing, she would prioritize a trial on the matter in the coming months. This decision allows OpenAI to continue with its transformation into a for-profit entity.
Musk’s legal team argued that OpenAI’s leaders, including Altman, exploited Musk’s altruistic motives to secure his funding, asserting that his financial backing was contingent on OpenAI remaining a nonprofit. However, the judge suggested that the emails and social media posts Musk presented were insufficient to establish a formal contract.
In February, OpenAI’s board rejected Musk’s $97.4 billion offer to purchase the company, with the board chairman stating that OpenAI was not for sale and rebuffing Musk’s efforts to disrupt their competition.
Currently, OpenAI operates under a hybrid structure—functioning as a nonprofit with a for-profit subsidiary. The transition to a full for-profit model is seen by Altman as essential for the company’s continued growth, but it has deepened the rift between him and Musk.
Musk, who provided the initial funding for OpenAI in 2015, left the company in 2018 due to potential conflicts of interest with his work at Tesla. He founded xAI in 2023, further intensifying his rivalry with OpenAI, which has become a key player in the AI space.
