Elon Musk faced a setback in his ongoing legal battle against OpenAI this week, as a federal judge declined his request for an injunction against the company’s transition to a for-profit model. However, the ruling may provide hope for those concerned about OpenAI’s evolving corporate structure.
Musk’s lawsuit, which also names Microsoft and OpenAI CEO Sam Altman as defendants, alleges that OpenAI has abandoned its original nonprofit mission to ensure AI development serves humanity. Originally founded as a nonprofit in 2015, OpenAI adopted a “capped-profit” model in 2019 and is now pursuing a transition to a public benefit corporation.
Musk sought a court order to halt this transition, but on Tuesday, U.S. District Judge Yvonne Gonzalez Rogers denied his request. Despite this, her ruling included concerns about the implications of OpenAI’s restructuring, particularly regarding the use of public donations to fund a nonprofit’s conversion into a for-profit entity.
Judge Rogers highlighted that OpenAI’s nonprofit arm still holds a controlling stake in its for-profit counterpart and stands to gain billions from the restructuring. She also referenced commitments made by key OpenAI figures, including Altman and company president Greg Brockman, who had initially vowed not to use OpenAI as a means of personal enrichment.
While rejecting the injunction, Judge Rogers expedited the case for trial in the fall of 2025. Musk’s attorney, Marc Toberoff, expressed satisfaction with the ruling and confirmed that Musk’s legal team will accept the offer for an accelerated trial. OpenAI has not yet responded to the decision.
The ruling adds to the regulatory uncertainty surrounding OpenAI. Tyler Whitmer, an attorney representing Encode, a nonprofit advocating for AI safety, told TechCrunch that Judge Rogers’ concerns could amplify regulatory scrutiny. Authorities in California and Delaware are already investigating OpenAI’s restructuring, and the ruling may encourage further probes.
However, OpenAI also secured some legal victories in the decision. The judge found that Musk’s evidence was insufficient to prove that OpenAI had breached a contract by accepting his $44 million in donations and later shifting to a for-profit model. Additionally, she dismissed claims that Musk’s AI company, xAI, would face irreparable harm if OpenAI’s transition proceeds. She also rejected allegations that OpenAI’s investor and partner, Microsoft, was violating antitrust regulations.
Musk, once an early backer of OpenAI, has now positioned himself as one of its fiercest critics. His company, xAI, is a direct competitor in the race to develop cutting-edge AI, and Musk and Altman are increasingly at odds both legally and politically.
For OpenAI, the stakes are immense. Reports indicate that it must complete its for-profit restructuring by 2026 to avoid financial complications, including the risk of raised capital being converted into debt.
One former OpenAI employee, speaking anonymously to TechCrunch, voiced concerns about the transition’s potential impact on AI governance and public safety. The employee stated that OpenAI’s original nonprofit model was intended to ensure ethical AI development, and shifting to a traditional for-profit structure could place financial incentives above broader societal benefits.
With legal and regulatory challenges mounting, the next few months will be crucial in determining the future of OpenAI’s corporate structure. Investors, AI ethicists, and industry regulators will be watching closely.
