Elon Musk faced a setback this week in his lawsuit against OpenAI, but a federal judge’s ruling may offer hope to those opposing OpenAI’s for-profit shift.
Musk’s lawsuit, which also names Microsoft and OpenAI CEO Sam Altman as defendants, accuses OpenAI of abandoning its nonprofit mission. Originally founded as a nonprofit in 2015, OpenAI transitioned to a “capped-profit” model in 2019 and now aims to become a public benefit corporation. Musk sought a preliminary injunction to block this transition, but U.S. District Judge Yvonne Gonzalez Rogers denied the request. However, she expressed concerns over the legal and ethical implications of OpenAI’s restructuring.
Judge Rogers stated that public funds used to convert a nonprofit into a for-profit entity could cause “significant and irreparable harm.” OpenAI’s nonprofit arm still holds a majority stake in its for-profit division and stands to gain billions from the transition. She also noted that OpenAI’s leadership, including Altman and Greg Brockman, originally pledged not to use the organization for personal financial gain. To resolve these disputes, the court has offered an expedited trial in fall 2025.
Musk’s legal team welcomed the decision and plans to proceed with the trial. Meanwhile, OpenAI has yet to respond. Legal experts believe Judge Rogers’ concerns could intensify regulatory scrutiny, with attorneys general in California and Delaware already investigating OpenAI’s transition.
Despite this, the ruling had some positives for OpenAI. Judge Rogers found Musk’s evidence of contractual breaches insufficient and noted Musk himself once considered OpenAI might become a for-profit entity. She also dismissed claims that OpenAI’s for-profit move would cause “irreparable harm” to Musk’s AI company, xAI.
With OpenAI facing financial and regulatory pressure, the coming months will determine how challenging its for-profit transition will be.
