OAKLAND, Calif. — In a courtroom clash on Tuesday, Elon Musk’s legal team confronted representatives from OpenAI as a federal judge deliberated over Musk’s request for an order that would prevent the AI company from transitioning to a for-profit model.
U.S. District Judge Yvonne Gonzalez Rogers stated that Musk’s assertion of potential irreparable harm appeared to be exaggerated. Nevertheless, she raised important questions regarding OpenAI’s connections with its business associate, Microsoft, and indicated that the case would proceed to trial next year for a jury to assess the claims.
Judge Gonzalez Rogers mentioned, “It is plausible that what Mr. Musk is asserting may be valid. We’ll find out, and he’ll present his case.” Musk, who was an early financial backer and board member of OpenAI, filed a lawsuit against the company last year. He initially brought the suit to a state court in California before transferring it to federal court, alleging that OpenAI deviated from its foundational purpose as a nonprofit entity dedicated to serving the public interest. According to Musk’s attorney, he invested approximately $45 million in OpenAI from its inception until 2018.
The legal confrontation intensified late last year when Musk introduced additional allegations and defendants, petitioning the court to halt OpenAI’s plans to fully pivot to a for-profit status. Musk also included his own AI enterprise, xAI, as a co-plaintiff in the case. His lawsuit also targets Microsoft and Reid Hoffman, a tech entrepreneur and former OpenAI board member who is now part of Microsoft’s board.
Judge Gonzalez Rogers acknowledged that granting Musk a preliminary injunction requires meeting a high threshold, although she has yet to make a determination on that request. She voiced “significant concerns” regarding two individuals linked to Microsoft on OpenAI’s board — Hoffman and Deanna Templeton, the latter serving as a non-voting observer.
“You expect me to believe she was present listening to every conversation without sharing that information? It makes no sense for her to be there otherwise,” the judge remarked. Hoffman, known as a co-founder of LinkedIn, joined Microsoft’s board following its acquisition of the social media platform. He resigned from OpenAI’s board in 2023 to mitigate any potential conflict of interest with his AI startup, Inflection.
Templeton was appointed as a non-voting member of OpenAI’s board during a turbulent period following the ousting of CEO Sam Altman, as Microsoft CEO Satya Nadella sought to stabilize the board. However, she was later removed as concerns about corporate governance practices were raised by U.S. antitrust regulators.
Judge Gonzalez Rogers has presided over multiple high-profile tech cases, including Apple’s disputes with Epic Games, although she clarified that Musk’s situation is “nothing like” those cases. This marks the last occasion she granted a preliminary injunction back in 2020, which preceded a trial by several months.
Appointed by former President Barack Obama in 2011, Gonzalez Rogers presided over Tuesday’s hearing originally scheduled for January but postponed due to a wildfire that destroyed attorney Marc Toberoff’s home in Pacific Palisades. Musk did not attend the hearing and accused the companies of failing to uphold their obligations concerning his initial contributions to the nonprofit. The judge deemed Musk’s claim of “irreparable harm” a bit of a stretch and described the case as “billionaires vs. billionaires.” She questioned Musk’s rationale for investing tens of millions of dollars without a written contract, to which Toberoff said it stemmed from the trust that existed between Musk and Altman at the time.
“That’s a significant amount of money to invest based purely on trust,” the judge noted.
OpenAI countered that Musk’s demand for a court order would undermine its operations and mission, benefitting Musk and his AI venture, which is founded on flimsy legal arguments. The core of the dispute traces back to internal conflicts in 2017 that led to Altman’s ascension as CEO of OpenAI.
Emails released by OpenAI revealed that Musk had also desired the CEO position but became frustrated after fellow co-founders expressed concerns over his potential dominance as a major stakeholder. Musk has consistently raised alarms about the risks posed by advanced AI technologies to humanity.
Altman managed to secure the CEO role and held it except for a brief period in 2023 when he was ousted but reinstated shortly after due to a board reshuffle. OpenAI has argued that Musk once supported the move to convert the organization into a for-profit entity to facilitate the financing needed for AI infrastructure and computing power.
Musk is not alone in challenging OpenAI’s for-profit transition; Meta Platforms, the parent company of Facebook and Instagram, has urged California’s attorney general to intervene, while Delaware’s attorney general is also examining the issue. The timeline for the trial remains uncertain, with Musk’s legal representation initially indicating readiness by June; however, Judge Gonzalez Rogers suggested it might be as late as June 2026 or early 2027 before the case goes to trial.
