OpenAI's for-profit U-turn apparently isn't enough for Elon Musk

Tue, May 6, 2025, 11:48 AM 3 min read

Elon Musk apparently is not satisfied with the announcement that OpenAI (OPAI.PVT) would ensure its nonprofit remains in control of the artificial intelligence upstart.

Musk's lawyer, Marc Toberoff, said OpenAI's latest corporate reshuffling plan changes nothing about Musk's legal claims against the creator of ChatGPT, according to Reuters and Bloomberg.

Toberoff told the media outlets that transitioning OpenAI's profit-seeking limited liability company to a public benefit corporation amounts to a "transparent dodge" that fails to address the core issues in Musk's lawsuit against OpenAI and that it "changes nothing."

Musk, who helped start OpenAI and is also the CEO of Tesla (TSLA), has alleged that transitioning OpenAI to a for-profit business would violate OpenAI's legal responsibility to carry out its original mission of ensuring artificial general intelligence benefits all of humanity.

According to Toberoff, OpenAI's new restructuring plan would still violate its mission if it continues to develop closed-source AI, rather than open-source AI, for the benefit of private parties.

The problem for Musk, Toberoff said, according to the report, is that OpenAI's charitable assets have been, and still will be, transferred for the benefit of private persons, including Musk's co-founder and OpenAI CEO Sam Altman, Altman's investors, and Microsoft (MSFT).

Bloomberg reported that Microsoft has yet to sign off on the new OpenAI structure.

The decision is bound to impact Musk's ongoing litigation against the startup that on Thursday received a judge's permission to go forward on multiple claims.

It’s unclear how the judge, Yvonne Gonzales Rogers, a federal district court judge in California's Northern District, will respond to OpenAI's about-face.

The judge ruled last week that some of Musk's claims against OpenAI could proceed to trial and prevented others from going forward. The case is currently set for trial in March 2026.

OpenAI began in 2015 as a nonprofit under the name OpenAI Inc., a nod to its mission of advancing humanity instead of pursuing profits. Musk helped fund OpenAI with a $45 million donation before leaving the organization.

Things got more complicated in 2019 when Altman and his team created a for-profit subsidiary to raise outside venture capital — including billions from Microsoft.

It was structured in such a way that the for-profit subsidiary, technically owned by a holding company owned by OpenAI employees and investors, remained under the control of the nonprofit and its board of directors while giving its biggest backer, Microsoft, no board seats and no voting power.