OpenAI and Microsoft will face a jury trial after a federal judge rejected their efforts to dismiss claims by Elon Musk that OpenAI violated its founding mission as a public charity. The ruling allows Musk’s lawsuit to move forward, with a trial scheduled for late April in federal court in Oakland, California.
Musk, who helped found OpenAI in 2015 alongside Sam Altman and others, alleges that the company breached commitments to remain a nonprofit and operate as an open-source organization. He argues that OpenAI abandoned those principles when it accepted billions of dollars from Microsoft and transitioned toward a for-profit structure. Musk later launched his own artificial intelligence company, xAI, in 2023.
In her decision, U.S. District Judge Yvonne Gonzalez Rogers declined to dismiss Musk’s claim that OpenAI breached a charitable trust. She wrote that Musk plausibly alleged his early financial contributions were made for a specific charitable purpose and were conditioned on OpenAI remaining nonprofit and open source. Those conditions, she said, align with OpenAI’s original charter and stated mission.
OpenAI argued that Musk lacked standing because his approximately $38 million contribution was made through an intermediary. The judge rejected that argument, writing that denying standing on that basis would weaken enforcement of charitable trusts more broadly and run counter to prevailing legal standards.
Fraud and Governance Claims
The court also allowed Musk’s fraud claims to proceed, citing internal OpenAI communications from 2017. According to the ruling, OpenAI co-founder Greg Brockman wrote to Musk that year expressing a desire to continue operating as a nonprofit. Two months later, Brockman wrote in a private note that the company could not say it was committed to remaining nonprofit, warning that doing so could be misleading if the structure later changed.
Judge Gonzalez Rogers said those documents were sufficient at this stage to support Musk’s allegation that OpenAI misrepresented its intentions during a critical period of fundraising and governance decisions.
OpenAI said in a statement that Musk’s lawsuit is baseless and part of a broader pattern of harassment. The company said it looks forward to presenting its case at trial and emphasized that the OpenAI Foundation remains one of the most well-resourced nonprofits in the technology sector.
Microsoft declined to comment. Musk’s attorney did not immediately respond to requests for comment.
OpenAI Restructuring and Rivalry
OpenAI, best known as the developer of ChatGPT, announced a major restructuring in October. The company said it transitioned its commercial operations into a public benefit corporation while maintaining nonprofit control. As part of that shift, Microsoft received a 27% ownership stake in the for-profit entity, formalizing its role as OpenAI’s largest strategic partner.
OpenAI was most recently valued at about $500 billion, reflecting investor optimism around its AI models, enterprise products, and infrastructure partnerships. The restructuring marked a significant milestone for Altman, who has long advocated for a hybrid structure that allows large-scale capital raising while retaining a nonprofit mission.
The lawsuit has intensified a public and legal feud between Musk and Altman that began in 2024. Musk’s xAI has emerged as a direct competitor to OpenAI, particularly in large language models and consumer-facing AI systems. Last year, OpenAI rejected Musk’s unsolicited $97.4 billion offer to acquire the nonprofit entity that controls the company.
Altman has described Musk’s legal actions as an attempt to slow a rival through the courts as competition in advanced AI systems accelerates.
