Musk Faces Off with OpenAI in Court Over For-Profit Conversion
OAKLAND, Calif. (AP) — Elon Musk's lawyers faced off with OpenAI in court Tuesday as a federal judge weighed the billionaire's request for a court order that would block the ChatGPT maker from converting itself to a for-profit company.
U.S. District Judge Yvonne Gonzalez Rogers said it was a “stretch” for Musk to claim he will be irreparably harmed if she doesn't intervene to stop OpenAI from moving forward with its transition from a nonprofit research laboratory to a for-profit corporation.
But the judge also raised concerns about OpenAI and its relationship with business partner Microsoft and said she wouldn't stop the case from moving to trial as soon as next year so a jury can decide.
“It is plausible that what Mr. Musk is saying is true. We’ll find out. He’ll sit on the stand,” she said.
The Background of the Dispute
Musk, an early OpenAI investor and board member, sued the artificial intelligence company last year, alleging that the companies are violating the terms of his foundational contributions to the charity.
At the heart of the dispute is 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, or AGI.
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.
The Court Hearing
Tuesday's hearing was originally set for January but was postponed after Musk's attorney Marc Toberoff said his house was destroyed in the Pacific Palisades wildfire.
Musk, who did not attend the hearing, has alleged that the companies are violating the terms of his foundational contributions to the charity. Judge Gonzalez Rogers called it a “stretch” to claim “irreparable harm” to Musk and called the case “billionaires vs. billionaires.”
She questioned why Musk invested tens of millions in OpenAI without a written contract. Toberoff said 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 Outcome
OpenAI has said Musk's requested court order would “debilitate OpenAI’s business” and mission to the advantage of Musk and his own AI company and is based on “far-fetched” legal claims.
At the heart of the dispute is 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, or AGI.
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.
Other Challenges to OpenAI's For-Profit Transition
Musk is not the only one challenging OpenAI's for-profit transition. Facebook and Instagram parent Meta Platforms has asked California's attorney general to block it, and the office of Delaware's attorney general has said it is reviewing the conversion.
It was not clear Tuesday when the case might go to trial. Musk's lawyers initially said they would be ready by June after some back-and-forth with the two sides the judge indicated it probably won't be until June 2026 at the earliest, but likely early 2027.