OpenAI and Microsoft Can’t Escape Elon Musk’s Lawsuit Over Broken Nonprofit Promises

TLDR

• Federal judge denies OpenAI and Microsoft’s motion to dismiss Elon Musk’s lawsuit, setting trial date for late April 2026
• Musk alleges OpenAI violated its nonprofit charter after accepting billions from Microsoft and restructuring as for-profit company
• Court cites 2017 internal emails showing OpenAI leadership privately acknowledged they weren’t committed to nonprofit status
• Judge rules Musk’s $38 million donation gives him legal standing to enforce charitable trust conditions
• OpenAI warns investors Musk will make outlandish claims at trial but says company has strong legal defenses

A California federal judge has ruled that OpenAI and Microsoft must stand trial over Elon Musk’s allegations that the artificial intelligence company abandoned its nonprofit mission. The decision moves the case forward to a jury trial scheduled for late April.

US District Judge Yvonne Gonzalez Rogers rejected dismissal motions from both defendants on Thursday. The ruling allows Musk to present evidence that OpenAI breached its founding charter as a charitable organization.

Musk co-founded OpenAI in 2015 and donated $38 million before leaving the board in 2018. He claims his contributions required two conditions: OpenAI would remain nonprofit and maintain open source technology.

The AI company announced restructuring plans in October 2024 and is now valued at $500 billion. Microsoft received a 27% ownership stake in the transition while the nonprofit arm maintains control.

Internal Emails Become Key Evidence

Judge Gonzalez Rogers highlighted internal communications from 2017 as critical to the case. Board member Shivon Zilis told Musk in September that co-founder Greg Brockman wanted to preserve the nonprofit structure.

The judge determined Musk presented sufficient evidence to proceed despite OpenAI’s arguments. She rejected claims that using an intermediary to donate eliminated his legal standing to enforce charitable conditions.

Musk’s attorney Marc Toberoff said the ruling confirms OpenAI leadership made knowingly false assurances about its mission. OpenAI responded that the lawsuit remains baseless and part of ongoing harassment from Musk.

Microsoft Faces Jury Decision on Involvement

The court found Musk provided enough evidence that Microsoft potentially aided OpenAI in breaching donor obligations. Judge Gonzalez Rogers wrote that a jury must determine whether Microsoft had actual knowledge of wrongdoing.

One claim against Microsoft was dismissed. The judge ruled Musk lacked the proper contractual relationship to argue Microsoft unjustly enriched itself at his expense.

Microsoft has invested billions in OpenAI and integrated the company’s technology across its product line. Representatives from Microsoft have not commented on the ruling.

OpenAI Prepares Investors for Public Trial

OpenAI sent a letter to investors and banking partners Thursday warning about the upcoming trial. The company expects Musk to make “deliberately outlandish, attention-grabbing claims” during court proceedings.

The AI firm told stakeholders it has strong defenses and believes the case is worth no more than Musk’s $38 million donation. OpenAI maintains confidence in winning but provided no guarantees.

Musk filed the lawsuit in August 2024 in US District Court for Northern California. He argues he was manipulated as OpenAI explored for-profit conversion and established partnerships with Microsoft.

The Tesla CEO founded competing AI company xAI in 2023 after leaving OpenAI. OpenAI rejected Musk’s $97.4 billion unsolicited offer to acquire the nonprofit’s assets last year.

CEO Sam Altman has accused Musk of weaponizing the legal system to hinder a competitor.

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