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A federal judge in California has denied Elon Musk’s attempt to stop OpenAI from transitioning into a for-profit entity. Issued on Tuesday, the decision stated that Musk and his legal team failed to meet the necessary legal burden to justify the request. However, other aspects of the lawsuit will continue.
Elon co-founded OpenAI in 2015. Since then, he has been vocal about his concerns over its recent direction. He claims that the company has strayed from its original objective as a nonprofit focused on artificial intelligence research. In March 2024, he filed a lawsuit accusing OpenAI of breach of contract and fiduciary duty.
OpenAI, known for its ChatGPT chatbot, has increasingly commercialized its technology in recent years. The company remains under the control of a nonprofit parent but is moving toward a new structure. In response, Musk has been one of the most outspoken critics of OpenAI CEO Sam Altman and the company’s leadership.
In November 2024 Musk and his legal team filed for a preliminary injunction to block OpenAI from becoming a for-profit company. The request was part of a larger legal battle that expanded in federal court to include claims of antitrust violations. Musk accused OpenAI and Microsoft of restricting competition by preventing investors from supporting rival AI startups, including his own company, xAI.
In December, OpenAI defended its restructuring plans. The company argued that Musk had initially supported the idea of a for-profit model in 2017. OpenAI later announced its intention to create a public benefit corporation, allowing it to attract more funding while maintaining aspects of its nonprofit mission.
Last month, Musk and an investor group offered to buy OpenAI for $97.4 billion. He later stated that he would withdraw the offer if OpenAI abandoned its transition to a for-profit model.
The legal dispute is far from over despite the court’s ruling. The federal court will proceed with Musk’s lawsuit against OpenAI on his claims regarding contract violations and antitrust breaches.
