Trial Examines OpenAI's Transition from Nonprofit to For-Profit Model

Elon Musk testified for a second day in a federal trial in Oakland, California, regarding his lawsuit against OpenAI and CEO Sam Altman. The suit alleges that OpenAI breached its founding agreements by shifting from a nonprofit mission to develop artificial general intelligence for humanity's benefit to a for-profit structure.

According to court filings cited in the case, OpenAI was established in 2015 as a nonprofit entity, with Musk as a co-founder and initial donor of approximately $40 million. Musk's complaint, filed in 2024, seeks to require OpenAI to return to nonprofit status, remove Altman from the board, and transfer about $150 billion in alleged wrongful profits to a charitable trust.

In testimony reported by multiple outlets, Musk stated that he co-founded OpenAI to "prevent a 'Terminator' outcome," referring to risks of unchecked AI development. He further testified, according to transcripts referenced in coverage, that OpenAI's leadership was attempting to "have your cake and eat it, too" by pursuing profits while claiming nonprofit ideals.

Musk left the organization in 2018 after emailing leadership that he would cease funding without structural commitments, as detailed in internal communications entered as evidence. OpenAI's defense, per court documents, asserts that Musk supported a for-profit transition in 2017 but demanded "absolute control," which the board rejected.

The company also claims in filings that Musk proposed merging OpenAI with Tesla in 2018 to compete with Google, an offer that was declined.

The trial, overseen by U.S. District Judge Yvonne Gonzalez Rogers, began with jury selection on Monday. Procedural details include technical issues, such as microphone failures during opening arguments, which the judge attributed to federal funding constraints in a remark to the court.

Judge Gonzalez Rogers issued warnings to both Musk and Altman against social media posts that could influence the case, noting prior online exchanges. No specific evidence of jury tampering has been presented in court records as of the second day of testimony.

OpenAI countersued, alleging in its filings that Musk's lawsuit stems from "hypocrisy and sour grapes" following his departure and the launch of his rival firm xAI. Internal texts referenced in the suit show Musk inquiring about involving Mark Zuckerberg in a potential bid for OpenAI assets.

Microsoft, a major investor in OpenAI, denied in a statement to the court any involvement in improper monetization schemes. The case draws on OpenAI's 2015 founding charter, which emphasized safe AGI development without profit motives, contrasted with its 2019 addition of a for-profit subsidiary and the 2022 release of ChatGPT, which reached 100 million monthly users.

Broader context from the dispute includes the 2021 founding of Anthropic by former OpenAI employees, including Dario Amodei, who cited concerns over OpenAI's direction in public statements. Musk launched xAI and developed the chatbot Grok. OpenAI's recent valuation stands at around $157 billion following a funding round, with no confirmed plans for a public listing documented in available sources.

The trial is projected to last a month, with testimony from both Musk and Altman. No named experts have publicly predicted the case's outcome in the provided sources; anonymous speculation on potential results appears in some reports but lacks attribution to specific individuals.