OpenAI, Microsoft lose last chance to avoid trial with Musk
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Mr Elon Musk claims OpenAI betrayed its founding mission as a public charity when it took billions in funding from Microsoft and made plans to operate as a for-profit business.
PHOTO: REUTERS
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OpenAI Inc and Microsoft failed to escape a trial over billionaire Elon Musk’s claims that Mr Sam Altman’s start-up betrayed its founding mission as a public charity when it took billions in funding from the software giant and made plans to operate as a for-profit business.
A federal judge in Oakland, California, on Jan 15 rejected requests by OpenAI and Microsoft to dismiss claims by Mr Musk and ordered the case to proceed to a jury trial set for late April.
Mr Musk helped Mr Altman and others launch OpenAI in 2015 and went on to found his own artificial intelligence company in 2023.
“Mr Musk’s lawsuit continues to be baseless and a part of his ongoing pattern of harassment, and we look forward to demonstrating this at trial,” OpenAI said in a statement.
“We remain focused on empowering the OpenAI Foundation, which is already one of the best resourced non-profits ever.”
In her ruling, US District Judge Yvonne Gonzalez Rogers refused to throw out Mr Musk’s accusation that OpenAI breached its promise to operate as a charitable trust.
She wrote that while the evidence is unclear, Mr Musk claims that his contributions to OpenAI “had a specific charitable purpose and that he attached two fundamental terms to it: that OpenAI be open source and that it would remain a non-profit – purposes consistent with OpenAI’s charter and mission”.
Rejecting an argument by OpenAI, the judge found that Mr Musk’s use of an intermediary to donate US$38 million (S$49 million) in seed money to the start-up does not strip him of legal standing to try to enforce those conditions.
The judge also refused to toss out Mr Musk’s fraud allegations, pointing to internal communications involving OpenAI co-founder Greg Brockman in 2017.
In an e-mail in September that year cited by the judge, fellow board member Shivon Zilis told Mr Musk that Mr Brockman would “like to continue with the non-profit structure” of OpenAI.
According to the ruling, two months later, in a private note, Mr Brockman wrote: “Cannot say that we are committed to the non-profit. Don’t want to say that we’re committed. If three months later we’re doing b-corp, then it was a lie.”
Mr Marc Toberoff, a lawyer for Mr Musk, said in an e-mail that the ruling confirms “there is substantial evidence that OpenAI’s leadership made knowingly false assurances to Mr Musk about its charitable mission that they never honoured in favour of their personal self-enrichment”.
“Now their ‘false faces must hide what their false hearts doth know’ and the stakes could not be higher,” Mr Toberoff wrote.
Ms Gonzalez Rogers said it will be up to the jury to decide whether Microsoft helped OpenAI breach its responsibilities to donors, like Mr Musk.
“Here, Musk identified considerable evidence raising a triable issue of fact that Microsoft had actual knowledge beyond vague suspicion of wrongdoing,” she wrote.
But the judge rejected Mr Musk’s claim that Microsoft “unjustly” enriched itself at his expense. In order to do so, Mr Musk would have had at least a “quasi-contractual relationship” with Microsoft, she said.
“Nor did Musk cite any evidence or allege any facts to support finding that Microsoft’s retention of any benefit was unjust,” the judge wrote.
Representatives of Microsoft did not respond to a request for comment.
OpenAI, the maker of ChatGPT recently valued at US$500 billion, announced its restructuring in October 2025.
It said at the time that it had given a 27 per cent ownership stake to its long-time backer Microsoft in a transition that will keep the start-up’s non-profit arm in control of its for-profit operations.
The transition of OpenAI to a public benefit corporation fulfilled Mr Altman’s long-held objective as its chief executive officer.
Mr Musk and Mr Altman, one-time business partners turned bitter foes, have feuded in court over the future of OpenAI since 2024.
Mr Musk’s xAI has become one of OpenAI’s main rivals.
In 2025, OpenAI rejected Mr Musk’s unsolicited bid to acquire the assets of the non-profit that controls the company for US$97.4 billion.
Mr Altman has denounced Mr Musk’s lawsuit challenging the OpenAI restructuring as a weaponisation of the legal system to slow down a competitor. BLOOMBERG
