OpenAI Strikes Back Against Musk: Legal Showdown Over Future Vision and Fair Practices

OpenAI's ongoing legal battle with its co-founder, Elon Musk, has taken a new turn as the company has filed a countersuit aiming to halt what it terms Musk’s “illegal and unfair practices.” OpenAI contends that Musk’s actions, including a purportedly fake acquisition proposal, aim to disrupt the company's progress and must be stopped.

In the countersuit, OpenAI’s attorneys underscore that Musk's actions have caused harm to the company, which prides itself on resilience. They further argue that continuing these actions poses a greater threat to OpenAI’s mission and public interest. This legal skirmish traces back to Musk accusing OpenAI of abandoning its original nonprofit intent, as the organization, which began in 2015 as a nonprofit, transitioned to a “capped-profit” model in 2019, with plans to eventually evolve into a public benefit corporation. Although a federal judge recently denied Musk's request for a preliminary injunction to block this transition, the case is set for jury trial in the spring of 2026.

As relations between Musk and OpenAI have soured, Musk has emerged as one of the company's principal adversaries. For OpenAI, the stakes are high, as the company risks losing some of the recently raised funds if it does not complete its profit-driven transformation by 2025.

Amidst this dispute, several organizations, including unions and nonprofit entities, have petitioned California Attorney General Rob Bonta to prevent OpenAI from becoming a for-profit entity, accusing it of failing to safeguard its charitable assets and undermining its philanthropic mission of advancing safe artificial intelligence. In alignment, a nonprofit supporting a failed California AI safety legislation, Encode, has filed an amicus brief expressing similar concerns.

In response, OpenAI asserts that its structural transformation will maintain a nonprofit segment and enhance it with additional resources to support charitable initiatives in areas like healthcare, education, and science. OpenAI emphasized on social media that the move is about growth and not abandonment, declaring that “We are building the most well-equipped nonprofit organization globally. Transforming does not mean giving up. Musk never truly cared about our mission, he always had his agenda.”