In a setback for the Tesla tycoon amid his conflict with Sam Altman, a US judge rejected Elon Musk’s request on Tuesday to stop OpenAI from turning into a for-profit company.
As the lawsuit moves forward to trial, US District Court Judge Yvonne Gonzalez Rogers decided that Musk and his xAI business had not demonstrated the need for an injunction against OpenAI.
As a co-founder of OpenAI, Musk filed a lawsuit in federal court in California to prevent the company from changing from a nonprofit to a for-profit enterprise, claiming the organization had broken antitrust laws and betrayed his faith in its purpose.
Although Musk did not demonstrate the necessity of an injunction, the court stated that she is willing to accelerate a trial on that claim later this year.
The ruling leaves OpenAI free to continue its transition from nonprofit to for-profit enterprise.
Musk’s injunction bid argued that OpenAI’s co-founders, including chief executive Altman, “took advantage of Musk’s altruism in order to lure him into funding the venture,” according to court documents.
Musk contended in filings that it was clear his backing of OpenAI was contingent on it remaining a nonprofit, offering a few email exchanges to support the claim.
“Whether Musk’s emails and social media posts constitute a writing sufficient to constitute an actual contract or charitable trust between the parties is debatable,” the judge said in her ruling.
OpenAI’s board chairman in February rejected a Musk-led offer to buy the valuable artificial intelligence company for $97.4 billion.
“OpenAI is not for sale, and the board has unanimously rejected Mr. Musk’s latest attempt to disrupt his competition,” OpenAI Board Chair Bret Taylor said in a statement posted by the company on Musk-owned X, formerly Twitter.
At the moment, OpenAI has a hybrid organizational structure, functioning as a charity with a profitable subsidiary.
The shift to a for-profit business model, which Altman believes is essential to the company’s growth, has made the already existing conflicts with Musk worse.
In 2015, Musk and Altman were part of an 11-person team that created OpenAI, with Musk contributing $45 million in initial funding.
Following his departure from the firm three years later, Musk gave OpenAI the excuse that there was “a potential future conflict for Elon… as Tesla continues to become more focused on AI.”
After OpenAI sparked a global passion for artificial intelligence, Musk founded his own business, xAI, in early 2023.
OpenAI has been forced to look for a new corporate structure that would provide investors equity and provide more stable governance due to the enormous expense of creating, training, and implementing AI models.
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