Judge denies Elon Musk's request to block OpenAI for-profit conversion
but welcomes trial
[March 05, 2025] By
MATT O'BRIEN and BARBARA ORTUTAY
OAKLAND, Calif. (AP) — A federal judge has denied Elon Musk's request
for a court order blocking OpenAI from converting itself to a for-profit
company but said she could expedite a trial to consider Musk's claims
against the ChatGPT maker and its CEO.
U.S. District Judge Yvonne Gonzalez Rogers ruled late Tuesday that “Musk
has not demonstrated likelihood of success on the merits” in his request
for a preliminary injunction. She offered to hold a trial in her
California courtroom as soon as this fall, “given the public interest at
stake and potential for harm if a conversion contrary to law occurred.”
Musk, an early OpenAI investor, began a legal offensive against the
ChatGPT maker and CEO Sam Altman a year ago, suing for breach of
contract over what he said was the betrayal of its founding aims as a
nonprofit.
He escalated the legal dispute late last year, adding new claims and
defendants, including Microsoft, and asking for a court order that would
stop OpenAI’s plans to convert itself into a for-profit business. Musk
also added his own AI company, xAI, as a plaintiff, claiming that OpenAI
was unfairly stifling business competition.
He and a group of investors more recently made an unsolicited $97.4
billion bid to buy a controlling stake in the nonprofit — a move that
undermined Musk’s “claim of irreparable harm,” the judge wrote.
OpenAI said it welcomed the court’s decision.
“This has always been about competition,” a statement from the company
said. “Elon’s own emails show that he wanted to merge a for-profit
OpenAI into Tesla. That would have been great for his personal benefit,
but not for our mission or U.S. interests.”
Musk alleges in the lawsuit that the companies are violating the terms
of his foundational contributions to the charity. He had invested about
$45 million in the startup from its founding until 2018, his lawyer has
said.
Musk attorney Marc Toberoff said in a statement late Tuesday that he is
pleased that the court offered an expedited trial on the core claims.
"We look forward to a jury confirming that Altman accepted Musk’s
charitable contributions knowing full well they had to be used for the
public’s benefit rather than his own enrichment,” Toberoff said.
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The OpenAI logo appears on a mobile phone in front of a computer
screen with random binary data, March 9, 2023, in Boston. (AP
Photo/Michael Dwyer, File)
 Gonzalez Rogers in a hearing last
month called it a “stretch” to claim “irreparable harm” to Musk, and
she called the case “billionaires vs. billionaires.” She questioned
why Musk invested tens of millions in OpenAI without a written
contract. Toberoff responded that it was because the relationship
between Altman and Musk at the time was “built on trust” and the two
were very close.
“That is just a lot of money” to invest “on a handshake,” the judge
said.
The dispute has roots in a 2017 internal power struggle at the
fledgling startup that led to Altman becoming OpenAI’s CEO.
Emails disclosed by OpenAI show Musk had also sought to be CEO and
grew frustrated after two other OpenAI co-founders said he would
hold too much power as a major shareholder and chief executive if
the startup succeeded in its goal to achieve better-than-human AI
known as artificial general intelligence. Musk has long voiced
concerns about how advanced forms of AI could threaten humanity.
Altman eventually succeeded in becoming CEO and has remained so
except for a period in 2023 when he was fired and then reinstated
days later after the board that ousted him was replaced.
Gonzalez Rogers, appointed by then-President Barack Obama in 2011,
has handled a number of tech industry cases including Apple’s fight
with Epic Games, though she said last month that Musk’s case is
“nothing like” that one. That case was also the last time she
granted a preliminary injunction, eight months before the case went
to trial.
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O'Brien reported from Providence, Rhode Island.
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