A U.S. federal judge in California has partially allowed Elon Musk to proceed with his lawsuit against OpenAI. This case accuses the AI company of straying from its original mission. Musk, one of OpenAI’s co-founders, says the company has shifted from a nonprofit focused on benefiting humanity to a business chasing profits.
OpenAI was founded in 2015 as a nonprofit organisation. Its mission was to create artificial intelligence that benefits all of humanity. Elon Musk was one of the founding members and an early donor. He believed AI development should be transparent and safe, and not controlled by a single corporation.
OpenAI Lawsuit: Why Elon Musk Is Taking His Own Creation to Court
Over time, OpenAI formed a partnership with Microsoft. The tech giant invested billions of dollars and became a key part of OpenAI’s growth. OpenAI also created a for-profit arm, OpenAI LP, to attract more investment. Musk says this shift betrayed the company’s original values. In February 2024, he filed a lawsuit claiming fraud and other violations.
On Thursday, U.S. District Judge Yvonne Gonzales Rogers ruled that Musk’s fraud claims can move forward. This means the court will now look deeper into how OpenAI changed its structure and purpose. The judge dismissed other parts of the lawsuit, such as accusations of racketeering, false advertising, and breach of fiduciary duty.
The court also refused to drop some of Musk’s claims against Microsoft. Microsoft is OpenAI’s largest backer and plays a major role in its operations. This adds more pressure on both companies as the case develops.
Why This Matters
This lawsuit comes at a critical time for OpenAI. The company is currently working on a restructuring plan to satisfy regulators in California and Delaware. These talks are important for a proposed $30 billion investment from Japanese tech firm SoftBank. However, if the deal isn’t finalized by the end of 2025, SoftBank may reduce its offer to $20 billion. This would force OpenAI to look for new investors.
The court’s decision means OpenAI will now face more legal questions about its business practices and mission. It also opens the door to more public scrutiny.
Possible Future Impact
This case could set a legal precedent for how AI companies must balance profit-making with ethical responsibilities. If Musk’s claims succeed, it might force OpenAI to revise its policies or structure. It could also influence how other tech companies handle AI development.
Investors may become more cautious about funding AI firms without clear ethical guidelines. Regulators might also take a closer look at how AI companies operate, especially those that started as nonprofits.
So far, neither Elon Musk’s legal team nor OpenAI has commented on the ruling.
The outcome of this case could reshape the future of AI and how it is controlled. It may also spark more debates about who should guide AI’s development—private companies, governments, or global organisations.