OpenAI's Restructuring Reversal: A Legal Battle with High Stakes for Investors

The ongoing legal clash between Elon Musk and OpenAI has taken a pivotal turn, as OpenAI abandoned its controversial plan to transfer control of its AI systems to a for-profit entity. Yet, Musk’s lawyer, Marc Toberoff, insists the restructuring reversal “changes nothing” in the billionaire’s lawsuit, which claims OpenAI has abandoned its original nonprofit mission. For investors, this battle—set against a backdrop of regulatory scrutiny, financial deadlines, and existential risks—has profound implications for OpenAI’s valuation, governance, and long-term viability.

The Restructuring Reversal and Legal Landscape

In May 2025, OpenAI announced it would retain control of its AI systems under its original nonprofit board, abandoning its prior plan to cede authority to a for-profit subsidiary. The shift followed pressure from California and Delaware’s attorneys general, public backlash, and ongoing litigation. However, Musk’s legal team argues the revised structure still prioritizes profit over the nonprofit’s mission to “benefit all of humanity.”

A U.S. District Court ruling in May 2025 upheld Musk’s claims of fraud and unjust enrichment, allowing the case to proceed to trial in March 2026. While OpenAI’s board chair, Bret Taylor, claims the reversal was a strategic choice—not a concession to Musk—the legal battle remains unresolved. A could also signal investor sentiment, given Microsoft’s $13.75 billion stake and its veto power over OpenAI’s restructuring.

Stakeholder Pressures and Financial Risks

OpenAI’s revised plan hinges on securing $30 billion in funding from SoftBank and other investors by December 2025. However, SoftBank’s terms allow it to reduce its commitment to $20 billion if restructuring isn’t finalized by year-end. This creates a precarious timeline: If the March 2026 trial disrupts approvals or investor confidence, OpenAI risks losing $10 billion in capital.

Meanwhile, Microsoft’s role looms large. As OpenAI’s largest investor, it can block the restructuring entirely, even as it competes with the company via its own AI division. A reveals its growing stakes in the sector, underscoring its leverage over OpenAI’s fate.

Mission Integrity and Governance Concerns

Critics argue the new public benefit corporation (PBC) structure still fails to safeguard OpenAI’s mission. While the nonprofit retains a “major stake” in the PBC, details of ownership and control remain opaque. Former employees and AI experts, including Stuart Russell and Lawrence Lessig, warn that profit-driven priorities could lead to “mission drift,” risking unchecked AI development.

The nonprofit’s ability to enforce its mission hinges on its equity stake’s valuation—a process currently under scrutiny by state attorneys general. If the valuation is deemed unfair, activists could challenge OpenAI’s governance, further delaying approvals.

The Path Forward for Investors

The stakes are immense. OpenAI’s $300 billion valuation (from a 2024 funding round) assumes it can balance profit and mission while outpacing rivals like xAI and Anthropic. However, unresolved legal and regulatory risks cloud this outlook:
- Legal Uncertainty: The March 2026 trial could force OpenAI to restructure again or face penalties.
- Funding Deadlines: A shows rapid growth, but a $10 billion funding shortfall could destabilize operations.
- Governance Trust: Investors must weigh whether the PBC model truly aligns with OpenAI’s mission or opens doors to profit-driven compromises.

Conclusion: A Fork in the Road for OpenAI

OpenAI’s restructuring reversal is less a victory than a tactical retreat in a high-stakes chess match. While the nonprofit retains control, Musk’s lawsuit and regulatory hurdles threaten to derail its financial and operational goals. Investors must consider three critical factors:

1. Legal Outcomes: If Musk prevails in court, OpenAI could face structural changes, governance overhauls, or even liability for past actions.
2. Funding Milestones: A will determine whether it honors its pledge, with $10 billion hanging in the balance.
3. Mission Alignment: Without transparent governance safeguards, OpenAI’s valuation may shrink as trust in its altruistic goals erodes.

For now, the company’s $300 billion valuation rests on a fragile foundation. As the trial approaches, investors should brace for volatility—and remember that OpenAI’s future hinges not just on its AI innovations, but on navigating a labyrinth of lawsuits, regulators, and competing interests.

In the end, the real question isn’t whether OpenAI can build the next GPT-5. It’s whether it can survive its own governance crisis long enough to matter.