Elon Musk fails to stop OpenAI’s transition to for-profit business as US Judge says no to injunction

A US judge on Tuesday (March 4) denied Elon Musk’s request to block OpenAI from transitioning into a for-profit business.

Musk had sued OpenAI in California federal court, claiming the company violated antitrust laws and betrayed its founding mission by shifting from a nonprofit to a for-profit enterprise.

Why is Musk suing OpenAI?

He argued that OpenAI’s co-founders, including Altman, misled him into funding the startup under the pretense that it would remain a nonprofit.

Musk had co-founded the company with Sam Altman and nine others in 2015. He initially contributed $45 million in funding before leaving the company in 2018.

Musk contended in court filings that his financial support for OpenAI was contingent on it maintaining its nonprofit status, citing a series of email exchanges as evidence.

He was seeking an injunction to stop the company from becoming a for-profit business.

An injunction is a court order that instructs a party to do or not do something. It’s a legal remedy that’s used to maintain or change the status quo.

What did the judge say?

US District Judge Yvonne Gonzalez Rogers ruled that Musk and his AI startup, xAI, failed to demonstrate that an injunction against OpenAI was necessary while the case moves toward trial.

“Whether Musk’s emails and social media posts constitute a writing sufficient to constitute an actual contract or charitable trust between the parties is debatable,” the judge wrote in her ruling.

The judge wrote that while Musk did not justify an immediate injunction, she would consider expediting a trial on the issue later this year.

The decision marked a setback for the billionaire as his legal battle with the artificial intelligence company and its CEO, Sam Altman, continues.

It also allows OpenAI to continue its transition to a for-profit model, a move that Altman has said is essential for the company’s long-term development.

Musk’s legal challenge

Musk’s lawsuit is the latest escalation in a years-long dispute with OpenAI.

Since then, Musk has openly criticised OpenAI, particularly its decision to pursue a for-profit business model. He launched his own AI company, xAI, in 2023 to compete with OpenAI’s popular AI products.

Tensions between Musk and OpenAI further escalated last month when OpenAI’s board rejected his $97.4 billion bid to buy the company .

“OpenAI is not for sale, and the board has unanimously rejected Mr. Musk’s latest attempt to disrupt his competition,” OpenAI Board Chair Bret Taylor said in a statement posted on Musk-owned X, formerly Twitter.

OpenAI currently operates under a hybrid structure, with a nonprofit overseeing a for-profit subsidiary. The company has defended the shift, arguing that the high costs of developing advanced AI models require private investment and stable governance.

With inputs from agencies