OAKLAND, Calif. — In a recent court session, attorneys representing Elon Musk clashed with those from OpenAI while a federal judge considered Musk’s request to prevent the AI company from transitioning from a nonprofit organization to a for-profit entity.
U.S. District Judge Yvonne Gonzalez Rogers expressed skepticism regarding Musk’s argument that he would face irreparable harm if the court does not intervene. Despite her reservations, she voiced apprehensions regarding OpenAI’s relationship with Microsoft, a business partner, and decided to allow the case to proceed to trial, anticipated for next year, where a jury will ultimately make a decision. “It is plausible that what Mr. Musk is saying is true. We’ll find out. He’ll sit on the stand,” she remarked during the hearing.
Musk, who was among the early investors in OpenAI and once held a position on its board, initiated legal action against the organization last year. Initially filed in a California state court and later moved to the federal level, Musk’s lawsuit claims that OpenAI has strayed from its original mission as a nonprofit organization aimed at benefiting the public. According to his attorney, Musk contributed roughly $45 million to the startup between its inception and 2018.
The legal conflict intensified late last year, as Musk added new accusations and named additional defendants, which included his AI venture, xAI, as a plaintiff. The lawsuit also implicates Microsoft and tech entrepreneur Reid Hoffman, who has been on the boards of both Microsoft and OpenAI.
Judge Gonzalez Rogers indicated that she has a stringent threshold for granting the type of preliminary injunction Musk seeks, although she has not yet ruled on the specific request. Having presided over various technology-related cases, including the notable dispute between Apple and Epic Games, she clarified that Musk’s situation is quite different from that one. Appointed to her federal position by then-President Barack Obama in 2011, the judge’s extensive experience highlights the significance of this case.
Originally scheduled for January, the hearing was postponed due to a wildfire in the Pacific Palisades that destroyed Musk’s attorney Marc Toberoff’s home. Although Musk did not attend the hearing, his lawsuit alleges that the involved companies are breaching the agreement related to his foundational donations.
OpenAI has countered Musk’s request by stating that granting his court order could severely disrupt its operations and hinder its mission, ultimately benefiting Musk and his AI startup. The company dismissed Musk’s legal claims as “far-fetched.” At the core of this dispute is a conflict from 2017 within OpenAI, which contributed to Sam Altman becoming its chief executive.
Internal communications revealed that Musk expressed interest in the CEO position but became frustrated when co-founders indicated that his substantial shareholding and potential role could centralize too much power in his hands, especially if the organization achieved its ambitious goal of developing artificial general intelligence (AGI). Musk has consistently raised alarms over the risks posed by advanced AI.
Altman’s leadership has been mostly stable since he took over, aside from a brief firing and subsequent reinstatement earlier in 2023 following a board upheaval.
OpenAI has endeavored to highlight that Musk was initially supportive of the idea to convert the organization to a for-profit model, which would enable it to secure funding necessary for the extensive computational resources needed for AI development. Additionally, Musk is not the sole opponent of OpenAI’s transition; Meta Platforms, the parent company of Facebook and Instagram, has urged California’s attorney general to intervene, while Delaware’s attorney general’s office is currently assessing the transition.
