Elon Musk’s request to prevent OpenAI and its partner Microsoft from transforming the nonprofit organization into a commercial company has been rejected by the California courts. But the billionaire has not lost everything.
New setback for Elon Musk after OpenAI refused to be bought by the billionaire.
California federal judge Yvonne Gonzalez Rogers, however, proposed to examine the billionaire’s accusation in order to organize a trial in the fall of 2025.
Elon Musk loses legal battle against OpenAI
“Given the public interest at stake and the potential harm, the court is willing to expedite the trial to fall 2025,” she said in the order published on Tuesday, March 4, 2025.
The Tesla CEO wants to block plans by OpenAI (co-founded by Sam Altman) and Microsoft—the company’s largest investor—to turn it into a commercial entity. The aim is to prevent any transfer of the company’s or its subsidiaries’ physical assets, including intellectual property.
The origins go back to the joint creation of OpenAI by Elon Musk and Sam Altman in 2015 as a non-profit organization. The Tesla executive left the AI company following disagreements over the direction of the project to launch his own company, xAI, which censors responses against him and Donald Trump.
Elon Musk believes his initial $45 million donation to fund the startup was conditional on OpenAI becoming a nonprofit.
For his part, Sam Altman explains that Elon Musk, whom he describes as a “tyrant”, wanted to merge OpenAI with Tesla to obtain additional funding.
Sam Altman and Microsoft call Elon Musk’s allegations “false” and say there is no legal basis to oppose OpenAI’s transformation into a for-profit company.
Elon Musk’s attorney Marc Toberoff said in a February 2025 hearing that allowing OpenAI to become a commercial enterprise would cause “irreparable harm” to Tesla’s CEO, xAI, investors and the public.
“I don’t think you’ve provided me with enough evidence to justify the measure you’re seeking,” Judge Yvonne Gonzalez Rogers responded, noting that the injunction requested by Elon Musk was rarely granted.
However, the judge acknowledges that Musk’s complaint raises legitimate questions about the terms of his relationship with OpenAI. Lawyers say the donations were conditioned on Altman’s commitment to run OpenAI as a nonprofit.
“I don’t know what actually happened, but I certainly don’t dismiss a case on a motion to dismiss when it’s plausible that Mr. Musk’s statements are true,” Judge Yvonne Gonzalez Rogers said. “We’ll see. He’ll testify. He’ll present his case to a jury. A jury will decide who’s right.” “It’s entirely plausible that an oral contract existed,” the judge added.
Elon Musk’s accusations against OpenAI are serious
Elon Musk wants to prevent the defendants from using cross-administrators who could share sensitive business information, and block any deal with OpenAI investors by preventing them from investing in competitors, including xAI.
Since the Tesla executive offered to buy Sam Altman’s company for $97 billion, Judge Yvonne Gonzalez Rogers said the offer contradicted his claim that turning OpenAI into a commercial enterprise would cause him “irreparable harm. “
Elon Musk also attacked Reid Hoffman, founder of LinkedIn, and Dee Templeton, an executive at Microsoft, whom he accuses of having illegally sat on the boards of directors of OpenAI and the Redmond firm at the same time when the companies were competing in the AI market.
The former has since left the non-profit organization’s board of directors. The latter remains an observer, without voting rights.
Elon Musk says Sam Altman is breaking anti-competition laws by asking current and potential OpenAI investors to “not fund competitors.” The AI company and its CEO’s lawyer, Sarah Eddy, denies the allegations.
“I’m very concerned that Microsoft put two members or two people on the board,” Judge Yvonne Gonzalez Rogers said. “Whether they had voting rights or not, they were still sharing information.” But she remains skeptical that Altman asked investors to follow his direction.
Musk’s lawyers told the judge that their request seeks to prevent xAI and other competitors from accessing a small pool of AI capital. The goal, they say, is to ensure Microsoft gains a dominant position in the market. The full trial will take place before 2027 or 2028.
SOURCE: Yahoo Finance