Elon vs. OpenAI Elon Musk loses initial attempt to block OpenAIs for-profit conversion OpenAI can proceed with for-profit shift while litigation continues, judge rules. Jon Brodkin Mar 5, 2025 1:10 pm | 10 Credit: Getty Images | Vincent Feuray Credit: Getty Images | Vincent Feuray Story textSizeSmallStandardLargeWidth *StandardWideLinksStandardOrange* Subscribers only Learn moreA federal judge rejected Elon Musk's request to block OpenAI's planned conversion from a nonprofit to for-profit entity but expedited the case so that Musk's core claims can be addressed in a trial before the end of this year.Musk had filed a motion for preliminary injunction in US District Court for the Northern District of California, claiming that OpenAI's for-profit conversation "violates the terms of Musk's donations" to the company. But Musk failed to meet the burden of proof needed for an injunction, Judge Yvonne Gonzalez Rogers ruled yesterday."Plaintiffs Elon Musk, [former OpenAI board member] Shivon Zilis, and X.AI Corp. ('xAI') collectively move for a preliminary injunction barring defendants from engaging in various business activities, which plaintiffs claim violate federal antitrust and state law," Rogers wrote. "The relief requested is extraordinary and rarely granted as it seeks the ultimate relief of the case on an expedited basis, with a cursory record, and without the benefit of a trial."Rogers said that "the Court is prepared to offer an expedited schedule on the core claims driving this litigation [to] address the issues which are allegedly more urgent in terms of public, not private, considerations." There would be important public interest considerations if the for-profit shift is found to be illegal at a trial, she wrote.Musk said OpenAI took advantage of himNoting that OpenAI donors may have taken tax deductions from a nonprofit that is now turning into a for-profit enterprise, Rogers said the court "agrees that significant and irreparable harm is incurred when the public's money is used to fund a non-profit's conversion into a for-profit." But as for the motion to block the for-profit conversion before a trial, "The request for an injunction barring any steps towards OpenAI's conversion to a for-profit entity is DENIED."In a summary of Musk's complaint, Rogers said it is alleged that OpenAI CEO Sam Altman "took advantage of Musk's altruism in order to lure him into funding the venture" but was only "pretending to share Musk's concern about the trajectory of the artificial intelligence industry." Musk says he gave $44 million to OpenAI from 2016 to 2020.Altman and co-founder Gregory Brockman allegedly "solicited millions in donations from Musk to build OpenAI on the promise that the organization would put people over profit and serve as a counterweight to the other dominant players in the AI space. With full knowledge that Musk's money was contingent upon using his money charitably, defendants set about building a for-profit behemoth contrary to their original promises."Musk cited emails but no formal contractMusk supported his claim with emails from 2015 to 2017 that he says show "an intent to make the donation contingent on OpenAI remaining a non-profit," Rogers wrote. He also cited his own social media posts "from 2023 and 2024 expressing anger at OpenAI's betrayal of its original non-profit motivations."But there was no formal contract submitted as evidence. "Other than these emails, no contract or gifting document with terms and conditions exists," Rogers wrote. "On this basis, defendants dispute the allegations. Whether Musk's emails and social media posts constitute a writing sufficient to constitute an actual contract or charitable trust between the parties is debatable."Rogers granted that the emails are "highly suggestive" for Musk's case but said they aren't enough on their own to demonstrate a likelihood of success at trial. "There is, for example, defendants' counter-evidence implying that Musk himself considered the possibility of being the one to turn OpenAI into a for-profit," she wrote. "On balance, the Court finds the emails are insufficient for purposes of the high burden required for a preliminary injunction and the question of likelihood of success on the merits to be a toss-up."Rogers found that because "the threshold question of whether a charitable trust was created remains a toss-up, Musk has not demonstrated likelihood of success on the merits sufficient to obtain an injunction."Trial expedited to fall 2025Musk's lawsuit also names OpenAI investor and partner Microsoft as a defendant and alleges that the companies violated antitrust law "based on the alleged issuance of a so-called 'fund no competitors' edict issued by OpenAI and Microsoft allegedly commanding OpenAI investors to avoid investing in any competitor." But Rogers' ruling said the lawsuit "has not actually alleged, or provided evidence of, an actual agreement between Microsoft and OpenAI to collude. That Microsoft is a major investor in OpenAI does not, by itself, support such a finding."Musk further complained about "interlocking directorates on the Microsoft and OpenAI boards" and sought an order "barring either corporation from benefiting from improper information sharing." The overall case could drag on for years, but Rogers said the question of OpenAI's for-profit conversion can be addressed in 2025."[G]iven the public interest at stake and potential for harm if a conversion contrary to law occurred, the Court is prepared to expedite trial to the fall of 2025 solely on that claim and potentially the interrelated contract-based claims," she wrote. "However, the Court would require all ancillary claims to be stayed. As discussed at the hearing, it is unlikely the full case will be ready for trial until 2027 or 2028."Musk and a consortium of investors recently made a $97.4 billion offer to buy OpenAI last week. OpenAI was founded as a nonprofit in 2015 and created an additional "capped profit" entity in 2019. That would change with OpenAI's planned shift to a for-profit public benefit corporation, but a nonprofit arm would continue to exist. OpenAI has reportedly considered granting special voting powers to its nonprofit board so that it would retain control over the restructured company.Separately, UK authorities today dropped an investigation into whether the Microsoft/OpenAI partnership violates competition law.Jon BrodkinSenior IT ReporterJon BrodkinSenior IT Reporter Jon is a Senior IT Reporter for Ars Technica. He covers the telecom industry, Federal Communications Commission rulemakings, broadband consumer affairs, court cases, and government regulation of the tech industry. 10 Comments