A legal dispute involving artificial intelligence firm OpenAI has escalated in a California courtroom, where tensions reportedly flared during the second day of testimony between Elon Musk and legal representatives of the organisation. The proceedings, taking place in Oakland, California, may have wider implications for the governance and regulatory structure of the artificial intelligence sector.
Mr Musk is giving evidence in person in a case centred on allegations he has made against OpenAI and its chief executive, Sam Altman. He argues that the organisation, originally founded as a non-profit entity in 2015, shifted away from its founding principles after moving towards a profit-driven model.
During Wednesday’s hearing, Mr Musk told the court that a single organisation cannot simultaneously operate under a charitable framework while also pursuing private financial gain. He stated that such dual objectives are incompatible, arguing that the organisation’s public-facing philanthropic identity conflicted with its commercial structure.
OpenAI’s legal team, represented by counsel Bill Savitt, challenged Mr Musk’s assertions. They argued that he was not consistently committed to maintaining OpenAI as a non-profit entity. The exchange between both sides reportedly became heated during cross-examination, prompting the presiding judge to instruct both parties to maintain order in court.
The hearing also examined Mr Musk’s earlier financial commitments to OpenAI. He had previously pledged approximately US$1 billion to the organisation but acknowledged in court that this amount was never fully delivered. He stated that concerns over the organisation’s direction contributed to his decision not to complete the funding, though he confirmed he contributed around US$38 million.
OpenAI, founded as a non-profit research organisation, has gradually transitioned towards a more conventional profit-oriented structure. In October, it completed a significant corporate restructuring while retaining a non-profit foundation with oversight responsibilities. The company has also recently attracted substantial investment, reportedly raising around US$122 billion in a funding round.
Mr Musk is seeking a court order to prevent OpenAI from becoming a fully profit-based company. He is also pursuing approximately US$134 billion in damages against OpenAI and its major investor Microsoft, alleging that the organisation has deviated from its original mission.
OpenAI, however, maintains that Mr Musk voluntarily left the organisation and was unable to secure the level of influence he desired over its governance. It also disputes his claims regarding funding commitments, stating that promised contributions were not fully realised.
Mr Musk told the court that, beyond financial input, he contributed through advice, networking, and public support for the organisation during its early development. During cross-examination, however, the judge instructed him to respond more directly to questions posed.
Mr Musk stepped down from OpenAI’s board in 2018. In 2023, he established a competing artificial intelligence company, xAI, which operates on a profit-driven model from its inception.
Summary of Key Positions
| Issue |
Elon Musk’s position |
OpenAI’s position |
| Organisational structure |
OpenAI deviated from non-profit mission |
Transition aligned with operational realities |
| Funding commitment |
Partial funding due to loss of trust |
Full pledged funding was not delivered |
| Governance dispute |
Seeks to block full for-profit transition |
Musk left voluntarily and disagreed with direction |
| Damages sought |
Approximately US$134 billion |
Claims are disputed |
The case continues and is expected to address broader questions about the governance of advanced artificial intelligence institutions and their evolving corporate structures.
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