Elon Musk can't stop OpenAI from going for-profit, judge rules

A federal judge in California has dealt a blow to Elon Musk’s legal battle against OpenAI, rejecting his request to block the company’s transition to a for-profit entity. U.S. District Judge Yvonne Gonzalez Rogers ruled on March 4, 2025, that Musk failed to provide sufficient evidence for the injunction. However, key parts of his broader lawsuit against OpenAI will proceed, setting the stage for an intense legal showdown.

Musk, who co-founded OpenAI in 2015, sued the company in March 2024, claiming it has abandoned its nonprofit mission to serve humanity and instead prioritized profits under Microsoft’s influence. Microsoft has invested over $13 billion into OpenAI, which shifted to a “capped-profit” model in 2019 and later announced plans to fully transition into a for-profit public benefit corporation by 2025. Musk contends this move violates OpenAI’s original principles and benefits Microsoft at the expense of public interest.

His lawsuit escalated in November 2024 when he sought a preliminary injunction, arguing OpenAI’s restructuring would cause “irreparable harm” and give Microsoft unfair control over AI. He also accused the company of monopolistic practices that hurt competitors like his own AI venture, xAI.

Judge Gonzalez Rogers rejected Musk’s injunction request, stating he had not demonstrated a likelihood of success. She noted his recent $97.4 billion unsolicited bid to buy OpenAI’s nonprofit arm as evidence that his lawsuit was more about competition than public interest. However, she allowed Musk’s broader claims — including breach of contract and antitrust allegations — to move forward, even offering to expedite the trial to fall 2025.

Musk has repeatedly called OpenAI’s profit-driven shift a “scam” and accused it of prioritizing Microsoft’s interests. His team claims OpenAI restricts rival investments and manipulates the AI market to suppress competition. Meanwhile, OpenAI dismisses the lawsuit as Musk’s attempt to stifle a competitor. In December 2024, the company released emails from 2017 showing Musk previously supported a for-profit structure and even suggested merging OpenAI with Tesla — a proposal rejected by co-founders.

OpenAI argues that its transition is necessary to secure the billions needed to advance artificial general intelligence (AGI). “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,” the board wrote in a December post, emphasizing that the shift allows the company to compete with major players like Google’s DeepMind and Anthropic.

The ruling comes at a pivotal moment for the AI industry, which is projected to generate over $1 trillion in revenue within a decade. OpenAI’s shift to a for-profit model reflects broader trends, as competitors like Anthropic and Google vie for dominance, and new players like China’s DeepSeek challenge U.S. leadership with open-source innovations. Meanwhile, Musk’s xAI has gained momentum with its Grok chatbot, positioning it as a direct rival to ChatGPT.

The legal skirmish also highlights regulatory scrutiny of Big Tech’s AI ambitions. The Federal Trade Commission has flagged Microsoft’s OpenAI investment as a potential threat to competition, while Meta and others have urged California’s Attorney General to pause OpenAI’s restructuring. These concerns underscore the stakes as AI reshapes industries and economies worldwide.