A U.S. judge has denied Elon Musk’s request to prevent OpenAI from transitioning into a for-profit business, marking a legal setback for the Tesla billionaire amidst his ongoing feud with OpenAI’s CEO, Sam Altman.
On Tuesday, U.S. District Court Judge Yvonne Gonzalez Rogers ruled that Musk and his xAI startup did not demonstrate a compelling case for an injunction against OpenAI’s shift. The ruling means OpenAI is free to continue its transition from a nonprofit model to a for-profit enterprise, despite Musk’s legal challenge.
Musk had filed a lawsuit in California federal court, arguing that OpenAI violated antitrust laws and betrayed his trust as a co-founder by changing its mission from a nonprofit to a for-profit business. He claimed that his financial support for OpenAI was contingent on it remaining a nonprofit, citing several email exchanges to bolster his argument.
However, Judge Gonzalez Rogers noted that Musk’s emails and social media posts did not establish a formal contract or charitable trust, and she did not find sufficient grounds for an injunction. While denying Musk’s request, the judge indicated that she would expedite the trial on this issue later in 2025.
The legal defeat comes as tensions between Musk and OpenAI escalate. Musk’s request to stop OpenAI’s transformation was also linked to his failed bid to acquire the company for $97.4 billion earlier this year. OpenAI’s board, led by Bret Taylor, rejected Musk’s offer, with Taylor stating that “OpenAI is not for sale.”
OpenAI has operated under a hybrid structure, being a nonprofit with a for-profit subsidiary, but Altman has stressed that the transition to a fully for-profit model is essential for the company’s growth and development. Musk and Altman, who were co-founders of OpenAI in 2015, have since drifted apart, with Musk leaving the company in 2018 due to potential conflicts related to his role at Tesla. Musk went on to found his own AI company, xAI, in 2023, after OpenAI gained significant attention for its AI advancements.
The high costs involved in developing AI models have led OpenAI to seek a new corporate structure that allows for investor equity and stable governance to support its long-term goals.
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