In 2015, a small group of researchers and technology entrepreneurs gathered in San Francisco to create what they described as a gift to humanity, eventually to turn into enemies defining the future of artificial intelligence (AI) in a courtroom.
Elon Musk loses blockbuster OpenAI suit as jury says too late
OpenAI was founded on the premise that if artificial general intelligence (AGI) was coming regardless, it was better to have safety and ethics-conscious researchers build it. AGI is the kind of AI that can match or surpass human cognition. The group decided to create the initiative as a nonprofit and if the technology ever arrived, it would belong to everyone, as open source. OpenAI’s CEO Sam Altman even went as far as to design the company’s board such that it could fire him too if he ever came in the way of its core mission. That founding promise, to build ethical AGI, years later brought Elon Musk and Mr. Altman to a federal courthouse in California.
Eleven years since the founding, no longer friends and both pursuing their own paths to AGI, Mr. Musk and Mr. Altman are both convinced that the other has betrayed everything they had vowed to build together.
Mr. Musk brought forward the lawsuit against Mr. Altman, accusing him, OpenAI president Greg Brockman, and Microsoft, of manipulating him into donating to a public-interest organisation only for it to later attach a for-profit subsidiary and accept billions from Microsoft.
On May 18, a nine-person jury took less than two hours to throw out Mr. Musk’s case against Mr. Altman. The verdict did not settle the question of whether OpenAI broke faith with its founding mission but instead, it was settled on a procedural issue – that Mr. Musk had waited too long to sue. In the American legal system, civil claims must be filed within a fixed window of time, crossing which the claim becomes invalid. The jury said Mr. Musk’s claim fell outside the statute of limitations. The judge concurred, but Mr. Musk’s lawyers have signalled that they might appeal. The merits of the case were never discussed.
The nonprofit debate
Trial testimony and evidence showed OpenAI’s leadership had anxiously tracked Google’s acquisition of another AI research giant DeepMind in 2014.
OpenAI’s executives argued that the nonprofit structure was not sufficient to compete with bigshots like Google.
Mr. Musk was the company’s biggest early donor, contributing around $38 million. But, the economics of building AGI turned out to be brutal. Training large models requires computing infrastructure that costs billions of dollars. By 2019, a year after Mr. Musk’s departure from the OpenAI board, the company decided it could not remain competitive as a pure nonprofit. It attached a for-profit subsidiary to the existing organisation, with the nonprofit retaining oversight and a capped return structure for investors.
Microsoft came in with an initial investment that year, and kept coming, eventually investing more than $135 billion and holding a significant share in OpenAI. This is the transformation Mr. Musk’s lawsuit sought to attack, from nonprofit to a commercially driven AI laboratory he had set out to oppose.
Claims that did not make it to trial
The bit that went to trial eventually was a much smaller subsect of the original claims Mr. Musk had filed in 2024. Several of his claims were dropped or narrowed before the trial even began.
Mr. Musk claimed that Microsoft’s investment in OpenAI had aided it to breach its charitable mission. But, despite a Microsoft executive testifying that the company had invested billions in OpenAI, the jury dismissed the claim.
Mr. Musk also filed an antitrust claim against OpenAI and Microsoft, alleging that the two companies were colluding to dominate the AI market. This claim has not reached the jury yet. Judge Gonzalez Rogers heard arguments and signalled she was sceptical, noting the aggressive competition already playing out across the AI industry. She has not ruled on it, meaning that particular thread remains unresolved. OpenAI on its part filed a countersuit accusing Mr. Musk of running a years-long harassment campaign against the company. A judge ruled in August 2025 that those claims were legally sufficient to go forward. That case is separate and still ongoing.
Key takeaways from the proceedings
The legal question the jury resolved was procedural. But the three weeks of testimony preceding the verdict were pure Silicon Valley tech theatre.
Mr. Musk’s lawyers assembled a long roster of witnesses who testified that Mr. Altman is not trustworthy. Mira Murati, who served as OpenAI’s chief technology officer, told the court that Mr. Altman had lied about a safety review in the past. Ilya Sutskever, one of the company’s founding researchers, had spent more than a year building a case for Mr. Altman’s removal from the company, assembling a 52-page memo that described a pattern of dishonesty and internal manipulation – a case widely covered in media.
In November 2023, OpenAI’s board briefly fired Mr. Altman and reversed course within days, primarily under pressure from Microsoft. Mr. Altman returned and Mr. Sutskever eventually left the company.
OpenAI’s lawyers demonstrated that while still on the board in 2017, Mr. Musk himself had pushed to restructure OpenAI as a for-profit entity, including an attempt to fold it into Tesla under his control.
Mr. Musk’s argument that he had always opposed commercialisation now sat awkwardly alongside evidence that he had sought to commercialise the company himself, especially on the condition that he be in charge. Musk’s own xAI, founded in 2023 and now part of SpaceX, is a for-profit company.
The larger question
The immediate winner from the latest verdict is OpenAI. The lawsuit had cast a shadow over the company’s plans for its upcoming IPO that could value it at close to a trillion dollars. Mr. Musk has said he will appeal.
There is a larger question the verdict leaves entirely unanswered. The trial showed how OpenAI’s founding principles were abandoned in pursuit of competition. The nonprofit structure still exists, and the OpenAI nonprofit now controls assets of more than $200 billion. But what that oversight means in practice was not explored in court.
Published – May 20, 2026 07:30 am IST
