Judge rejects Musk's request to block OpenAI's for-profit transition

A federal judge in California has rejected Elon Musk's request to block OpenAI's transition into a for-profit entity but will speed up the process to examine the billionaire's claims against the ChatGPT producer and its owner Sam Altman.

According to a filing published on Tuesday, US district judge Yvonne Gonzalez Rogers said that “Musk has not demonstrated likelihood of success on the merits” in his request for a preliminary injunction, adding that the plaintiffs “failed to meet their burden of proof for the extraordinary relief requested.”

However, other aspects of the lawsuit filed by Musk against the AI company may go forward, given the public interest at stake, the document says.

The judge proposed holding a trial in California later this year.

OpenAI was founded as a non-profit organisation in 2015 with a mission to ensure that general artificial intelligence (AGI) benefits all of humanity, the company said at the time.

Over time, the company has developed and commercialised several products, including the popular chatbot ChatGPT, but the company is still overseen by a non-profit parent company, OpenAI Inc, with the structure aiming to allow the organisation balancing commercial interests and its initial mission, the company said.

In October 2024, the ChatGPT maker secured a $4 billion revolving credit line with backers including JPMorgan Chase, Citi, Goldman Sachs, Morgan Stanley, Santander, Wells Fargo, SMBC, UBS and HSBC. Microsoft, the start-up's largest backer, and new investor Nvidia also joined the financing in the form of convertible notes.

The deal gave OpenAI access to more than $10 billion in capital, providing the flexibility to invest in new ventures and purchase expensive computing capabilities, including Nvidia chips, as the start-up continues to grow, the company said.

"This line of credit further strengthens our balance sheet and provides the flexibility to take advantage of future growth opportunities,” said Sarah Friar, OpenAI's chief financial officer said at the time.

In November 2024, Elon Musk, his startup xAI and former OpenAI board member Shivon Zilis filed a preliminary injunction to stop OpenAI's transition to a for-profit entity. The lawsuit was part of a larger lawsuit filed by Musk in March 2024, which included claims for breach of contract and breach of fiduciary duty.

The case was then transferred to a federal court, where Musk expanded his complaint to include antitrust allegations against OpenAI and Microsoft, claiming that the companies violated antitrust laws and asked investors not to invest in competitors such as Musk’s xAI.

“The hundreds of billions of dollars that major companies are now investing into AI development show what it will really take for OpenAI to continue pursuing the mission,” OpenAI’s board wrote in a post at the time.

In February, a consortium led by Elon Musk submitted an unsolicited $97.4 billion bid to acquire the non-profit organisation that controls OpenAI, marking a dramatic escalation in the ongoing dispute between the billionaire and his former company, with the bid threatening to complicate OpenAI's planned transition from non-profit to for-profit organisation.

"It's time for OpenAI to return to the open-source, safety-focused force for good it once was. We will make sure that happens," Musk said in a statement accompanying the bid.



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