Judge rejects Musk’s effort to block OpenAI’s transition to a for-profit enterprise

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U.S. District Court Judge Yvonne Gonzalez Rogers has rejected Elon Musk’s motion for an injunction that would have blocked OpenAI’s transition into a for-profit company. The judge argued that the plaintiffs “failed to meet their burden of proof for the extraordinary relief requested.”

The Tesla tycoon sued in a California federal court to stop OpenAI from transitioning from a nonprofit to a for-profit business. He claimed the startup violated antitrust law and betrayed his trust in their mission as a co-founder of OpenAI. 

Judge rejects Musk’s effort to halt OpenAI’s transition into a for-profit firm

Judge Denies @elonmusk 's Bid to Halt @OpenAI 's For-Profit Shift. pic.twitter.com/X96dfrEd6V

— AIM (@Analyticsindiam) March 5, 2025

According to a court filing on Tuesday, Musk‘s efforts to halt OpenAI’s transformation into a for-profit entity were rejected by a federal judge in California. Judge Yvonne Gonzalez argued that Musk and his xAI startup failed to prove an injunction against OpenAI was necessary as the case heads to trial. 

The court documents showed that the SpaceX entrepreneur’s injunction bid argued that OpenAI’s co-founders “took advantage of Musk’s altruism in order to lure him into funding the venture.” The American businessman contended in filings that it was clear his backing of the AI firm was contingent on it remaining a nonprofit. Musk also offered a few email exchanges to support his claim.

“Whether Musk’s emails and social media posts continue writing sufficient to constitute an actual contract or charitable trust between the parties is debatable.”

~ U.S. District Court Judge Yvonne Gonzalez Rogers.

Gonzalez highlighted that she was prepared to expedite Musk’s claim later this year, though he did not prove the need for an injunction. The filing also noted that other aspects of Musk’s lawsuit against the artificial intelligence startup that he co-founded with Sam Altman and others can proceed. The judge’s ruling allowed OpenAI to continue its transition from nonprofit to for-profit enterprise.

Musk wants OpenAI to remain a nonprofit company

Sam Altman, Elon Musk, and an 11-person team created OpenAI as a nonprofit AI research lab in 2015. The company has been commercializing products in recent years, most notably its viral ChatGPT chatbot. The tech firm is still overseen by a nonprofit parent and has faced significant hurdles in its goal to transition into a for-profit. Musk has been leading the charge and has become one of Altman’s chief adversaries.

Musk provided the startup with initial funding of $45 million. He left the company three years later, with OpenAI citing “a potential future conflict for Elon … as Tesla continues to become more focused on AI.” The senior advisor to the President of the United States established his own artificial intelligence company, xAI, in early 2023.

In November, attorneys representing the Tesla tycoon, xAI, and former OpenAI board member Shivon Zilis filed for a preliminary injunction against the company’s for-profit pursuits. The case was withdrawn from state court and refiled in federal court, with the American businessman expanding the case to include claims that Microsoft and OpenAI had breached antitrust laws. Musk argued that both firms violated antitrust laws when OpenAI allegedly asked investors to agree not to invest in rival companies, including xAI.

The SpaceX co-founder described OpenAI’s efforts to convert to a for-profit corporation as a “total scam” and claimed that “OpenAI is evil.” In December, the AI firm clapped back and maintained that in 2017 Musk “not only wanted, but actually created, a for-profit” to serve as the company’s proposed new structure.

Sam Altman disclosed on February 11 that the AI company was “not for sale,” and they were open to working with China after a group led by Musk made a $97.4 billion bid to purchase it. OpenAI Board Chair Bet Taylor also acknowledged that the firm was not for sale, and the board had unanimously rejected Mr Musk’s latest attempt to disrupt his competition.

The artificial intelligence company currently operates in a hybrid structure as a nonprofit with a money-making subsidiary. The transition to a for-profit model, one that Altman believes is crucial for the firm’s development, has intensified ongoing tensions with the Tesla tycoon.

The huge costs of designing, training, and deploying AI models are what compelled the AI company to seek a new corporate structure that would give investors equity and provide more stable governance.

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