A U.S. judge has denied Elon Musk’s request to prevent OpenAI from operating as a for-profit business, marking a legal setback for the billionaire amid his dispute with the AI company’s leadership.
U.S. District Court Judge Yvonne Gonzalez Rogers ruled that Musk and his AI startup, xAI, failed to demonstrate the need for an injunction against OpenAI as the case moves toward trial. Musk had sued in a California federal court, arguing that OpenAI’s transition to a for-profit model violated antitrust laws and betrayed the original mission he helped establish as a co-founder.
The legal battle follows OpenAI’s rejection of a Musk-led offer to acquire the company for $97.4 billion. “OpenAI is not for sale, and the board has unanimously rejected Mr. Musk’s latest attempt to disrupt his competition,” Board Chair Bret Taylor said in a statement posted on X, the social media platform owned by Musk.
Founded in 2015 as a nonprofit AI research organization, OpenAI later adopted a hybrid model with a for-profit subsidiary to attract investment and sustain its operations. Musk, who initially provided $45 million in funding, departed in 2018, citing potential conflicts with Tesla’s AI ambitions. In 2023, he launched xAI, a competing AI venture.
Musk claims his financial support was based on OpenAI remaining a nonprofit and presented email exchanges to support his argument. However, Judge Rogers ruled that these communications may not be sufficient to establish a binding contract or trust agreement.
While the ruling allows OpenAI to continue its transition, the case is set to proceed to trial later this year.
