OpenAI and Microsoft Headed to Trial Over Elon Musk Nonprofit Claims

TLDR

• A federal judge rejected OpenAI and Microsoft’s requests to dismiss Elon Musk’s lawsuit, sending the case to trial in late April 2026
• Musk claims OpenAI betrayed its founding mission as a nonprofit when it accepted billions from Microsoft and planned to become for-profit
• The judge found Musk has legal standing to enforce conditions on his $38 million donation, which he says required OpenAI to stay nonprofit and open source
• Internal emails from 2017 show OpenAI co-founder Greg Brockman privately wrote they were not committed to the nonprofit structure
• OpenAI warned investors to expect “deliberately outlandish” claims from Musk during the trial and maintains the lawsuit is baseless

A federal court in Oakland has ordered OpenAI and Microsoft to face trial over allegations from Elon Musk that the AI company abandoned its charitable mission. The trial is scheduled for late April 2026.

US District Judge Yvonne Gonzalez Rogers denied requests from both companies to dismiss the case on Thursday. The ruling allows Musk to present his claims to a jury.

Musk helped launch OpenAI in 2015 as a nonprofit research organization. He contributed $38 million in seed funding through an intermediary before leaving the company’s board in 2018.

The lawsuit centers on Musk’s claim that OpenAI broke promises to operate as a charitable trust. He argues his donations came with two conditions: that OpenAI would remain open source and maintain its nonprofit status.

OpenAI is now valued at $500 billion after announcing restructuring plans in October 2024. The company gave Microsoft a 27% ownership stake while keeping the nonprofit arm in control of for-profit operations.

Email Evidence Survives Dismissal

Judge Gonzalez Rogers pointed to internal communications from 2017 as key evidence. In September that year, board member Shivon Zilis told Musk that co-founder Greg Brockman wanted to continue with the nonprofit structure.

The judge wrote that while the evidence is unclear, Musk has presented enough to proceed. She rejected OpenAI’s argument that using an intermediary to donate stripped Musk of legal standing.

Marc Toberoff, Musk’s lawyer, said the ruling confirms substantial evidence that OpenAI’s leadership made false assurances about its charitable mission. OpenAI called the lawsuit baseless and part of Musk’s ongoing harassment pattern.

Microsoft Role Under Scrutiny

The judge found Musk presented enough evidence that Microsoft may have helped OpenAI breach its responsibilities to donors. She said a jury must decide if Microsoft had actual knowledge of wrongdoing.

The court did reject one claim against Microsoft. Musk argued the software company unjustly enriched itself at his expense, but the judge said he lacked the proper relationship with Microsoft to make that claim.

Microsoft has not commented on the ruling. The company has invested billions in OpenAI and integrated its technology across products.

The AI company told investors it has strong defenses and feels confident about winning. OpenAI said the case is worth no more than the $38 million Musk donated, though that is not guaranteed.

Musk filed the lawsuit in August 2024 in US District Court in Northern California. He claims he was manipulated and deceived as OpenAI explored converting to a for-profit entity.

The billionaire departed OpenAI’s board in 2018 and later founded his own AI company, xAI, in 2023. xAI has become one of OpenAI’s main rivals in the artificial intelligence market.

Last year, OpenAI rejected Musk’s unsolicited bid to acquire the nonprofit’s assets for $97.4 billion. CEO Sam Altman has called Musk’s legal actions a weaponization of the court system to slow down a competitor.

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