Elon Musk’s legal feud with OpenAI CEO Sam Altman is just getting started.
A California federal district judge this week made it clear that a courtroom fight over the future of OpenAI — the organization Musk and Altman founded together in 2015 before parting ways — could last well into 2027.
That’s likely how long it will take for the dispute between the one-time collaborators to go to a jury trial — which Oakland federal district Judge Gonzalez Rogers said was where the case was headed.
“Something is going to trial in this case,” she said Tuesday.
This week’s development means a long, drawn-out fight looms for two of the most prominent figures in the tech world as they battle to advance artificial intelligence while also taking potshots at each other on social media.
Their enmity flared into the open during President Donald Trump’s first week in the Oval Office when Trump announced a joint venture called Stargate that would invest up to $500 billion in AI infrastructure via a partnership between OpenAI, Oracle (ORCL) and SoftBank.
Musk criticized the effort hours after it was unveiled, saying on X that “They don’t actually have the money.”
Altman responded on X by saying Musk was “wrong, as you surely know” and invited Musk to visit an AI development site in Texas.
“(T)his is great for the country. i realize what is great for the country isn’t always what’s optimal for your companies, but in your new role i hope you’ll mostly put (America) first,” Altman wrote, attaching an American flag emoji.
Their courtroom battle began last August when Musk filed a lawsuit accusing OpenAI, the creator of chatbot ChatGPT, of putting profits before its initial nonprofit mission of advancing AI in a way that benefits all of humanity.
Musk co-founded OpenAI with Altman and OpenAI president Greg Brockman, and funded the venture with $45 million in donations. He left in 2018 and now runs a competing AI company called xAI.
The judge overseeing the case declined this week to give Musk what he had been seeking immediately: a ruling from the court blocking OpenAI from converting to a for-profit business.
“I don’t think you’ve given me a record for the relief you are requesting,” Gonzalez Rogers said, noting that such injunctions are rarely granted.
But she agreed that Musk’s complaint raised disputable questions about the terms of his relationship with OpenAI. His lawyers have claimed his donations were conditioned on Altman’s commitments to operate OpenAI as a non-profit.
“I don’t know what happened, but I certainly am not throwing something out on a motion to dismiss when it is plausible that what Mr. Musk is saying is true,” Gonzalez Rogers said. “We’ll find out. He’ll sit on the stand. He’ll present it to a jury. A jury will decide who’s right.”
Altman, OpenAI and its biggest backer Microsoft (MSFT), which is also named as a defendant in the case, have called Musk’s allegations “false” and claimed he has no legal basis for blocking OpenAI’s for-profit conversion.
Microsoft CEO Satya Nadella, right, speaks as OpenAI CEO Sam Altman looks on during a 2023 OpenAI DevDay event in San Francisco. (Photo by Justin Sullivan/Getty Images) ·Justin Sullivan via Getty Images
At the core of the dispute between Musk and Altman is why Musk left OpenAI in the first place.
Musk claims he parted ways with OpenAI in part over Altman’s push to convert the startup into a for-profit company. Altman claims Musk wanted to merge OpenAI into his for-profit electric vehicle company, Tesla (TSLA), so that Tesla could provide it with additional funding.
During a hearing on Tuesday, Musk’s lawyers said the Tesla CEO made it “absolutely clear” that his donations were conditioned on commitments from Altman and Brockman to operate OpenAI as a non-profit.
“It is absolutely plausible that there was an oral contract,” the judge said. Later, she noted that Musk’s failure to demand a written contract for his $45 million in donations led to the parties’ dispute.
Musk has also named LinkedIn founder Reed Hoffman and Microsoft executive Deanna Templeton as defendants, claiming they illegally served as directors of both OpenAI and Microsoft at a time when the two companies were competing in the AI market.
Hoffman has since resigned from the nonprofit’s board. Templeton is a non-voting observer.
Musk’s lawyer, Marc Toberoff, said during the hearing that allowing OpenAI to continue pursuing for-profit status would cause “irreparable harm” to Musk, xAI, investors, and the public.
Elon Musk during an inauguration event at Capital One Arena on Jan. 20, in Washington, DC. (Photo by Christopher Furlong/Getty Images) ·Christopher Furlong via Getty Images
According to Musk, Altman breached laws against unfair competition by communicating a “Fund No Competitors” edict to OpenAI’s current and prospective investors, and by orchestrating Hoffman’s and Tempelton’s interlocking board positions. These are claims that OpenAI and Altman lawyer Sarah Eddy denied.
“I have significant concerns with Microsoft having put two members or two people on the board,” Gonzales Rogers said. “Whether or not they were voting – they were still information-sharing.”
Gonzalez Rogers was skeptical of Musk’s claim that investors were swayed, even if there was an edict, as well as Altman’s claim that such a restriction never existed.
Musk’s lawyers told the judge the alleged restriction was intended to block xAI and other rival firms from accessing a small pool of capital earmarked for artificial intelligence, and in turn, further entrench Microsoft’s dominant AI market share.
As of October 2024, Microsoft had poured $13.75 billion into OpenAI. Musk’s lawyer said xAI had raised $11 billion after Altman’s alleged mandate, prompting a note of skepticism from the judge.
“How can I say…there’s a likelihood of restraint on trade when your client has raised $11 billion,” Gonzalez Rogers asked Musk’s lawyer.
OpenAI CEO Sam Altman, right, accompanied by U.S. President Donald Trump in the Roosevelt Room of the White House on Jan. 21. (Photo by Andrew Harnik/Getty Images) ·Andrew Harnik via Getty Images
She also offered skepticism when discussing arguments made by OpenAI.
“Where is the declaration from Sam Altman to say I didn’t issue this edict?” the judge asked OpenAI’s attorney.
She then pushed Microsoft’s and OpenAI’s lawyers to explain the relationship between the two firms.
Eddy positioned Microsoft as a competitor to OpenAI in the limited market for chatbots. Microsoft’s chatbot, Copilot, she said, competes with OpenAI’s chatbot, ChatGPT.
“Are they competitors or are they collaborators?” Gonzalez Rogers asked, pointing out that Microsoft identified OpenAI as a competitor in its regulatory filing.
“The case is they are competitors, and they’re also collaborators,” Microsoft’s lawyer, Russell Cohen, said.
As of October 2023, OpenAI was valued at $157 billion. The organization is reportedly now in discussions to raise another $40 billion that would reportedly increase its valuation to an estimated $340 billion.
Alexis Keenan is a legal reporter for Yahoo Finance. Follow Alexis on X @alexiskweed.
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