A federal judge expressed skepticism over Elon Musk’s claims that he will suffer irreparable harm if OpenAI is allowed to proceed with its transition to a for-profit company, but welcomed the possibility of a trial to resolve the billionaire’s lawsuit against the AI startup founded as a non-profit.
AP News reports that in a court hearing this week, U.S. District Judge Yvonne Gonzalez Rogers heard arguments from lawyers representing Elon Musk and OpenAI as she considered Musk’s request for a court order to block the AI company from converting itself into a for-profit corporation. The judge described Musk’s claims of irreparable harm as a “stretch” but also raised concerns about OpenAI’s relationship with its business partner Microsoft.
Musk, an early investor and former board member of OpenAI, filed a lawsuit against the company last year, initially in a California state court and later in federal court. He alleged that OpenAI had betrayed its founding principles as a nonprofit research lab dedicated to benefiting the public good. Musk had invested approximately $45 million in the startup from its founding until 2018, according to his lawyer.
Late last year, Musk escalated the legal dispute by adding new claims and defendants, including his own AI company, xAI, as a plaintiff. He also sought a court order to halt OpenAI’s plans to fully transition into a for-profit business. The lawsuit also targeted OpenAI’s close business partner Microsoft and tech entrepreneur Reid Hoffman, a former OpenAI board member who also sits on Microsoft’s board.
Breitbart News previously reported that “Godfather of AI” Geoffrey Hinton has come out in support of Musk’s lawsuit:
Hinton, who is often referred to as the “Godfather of AI” for his groundbreaking work on neural networks, issued a statement through Encode, a youth-led advocacy group for human-centered AI. In the statement, Hinton criticized OpenAI’s decision to abandon its non-profit status, stating, “OpenAI was founded as an explicitly safety-focused non-profit and made a variety of safety related promises in its charter. It received numerous tax and other benefits from its non-profit status. Allowing it to tear all of that up when it becomes inconvenient sends a very bad message to other actors in the ecosystem.”
OpenAI was launched in 2015 as a non-profit research organization with a mission to ensure that artificial intelligence benefits humanity as a whole. However, the company has recently taken steps to transition into a for-profit entity, sparking concerns among some of its co-founders, including Musk.
During the hearing, Judge Gonzalez Rogers expressed “significant concerns” about the presence of two individuals with ties to Microsoft on OpenAI’s board: Reid Hoffman and Deanna Templeton, a longtime Microsoft executive who served as a “non-voting observer.” The judge questioned the purpose of Templeton’s presence on the board if not to communicate information to Microsoft.
Hoffman, a co-founder of LinkedIn, has been on Microsoft’s board since the tech giant acquired the job networking site. He stepped down from OpenAI’s board in 2023 to avoid conflicts with his AI startup, Inflection. Templeton, who was also named as a defendant by Musk, was added to OpenAI’s board as a non-voting member following the ouster of CEO Sam Altman, but was later dropped amid concerns from U.S. antitrust enforcers.
The judge, who was appointed to the federal bench by then-President Barack Obama in 2011, has handled several high-profile tech industry cases, including the dispute between Apple and Epic Games. She noted that Musk’s case is “nothing like” the Apple-Epic Games case, which was the last time she granted a preliminary injunction back in 2020.
Musk’s attorney, Marc Toberoff, explained that the billionaire had invested tens of millions in OpenAI without a written contract due to the close relationship and trust between Musk and Altman at the time. The judge remarked that investing “a lot of money” based on a “handshake” was unusual.
OpenAI has argued that Musk’s requested court order would “debilitate” its business and mission, benefiting Musk and his own AI company, and that the legal claims are “far-fetched.” The dispute stems from a 2017 internal power struggle at the startup, which resulted in Altman becoming the CEO. Emails disclosed by OpenAI show that Musk had also sought the CEO position but faced resistance from other co-founders who believed he would hold too much power as a major shareholder and chief executive if the company achieved its goal of developing artificial general intelligence (AGI).
In addition to Musk’s challenge, OpenAI’s for-profit transition has also faced scrutiny from other parties. Mark Zuckerberg’s Meta, the parent company of Facebook and Instagram, has asked California’s attorney general to block the move, while Delaware’s attorney general’s office is reviewing the conversion.
The AP contributed to this report.
Read more at AP News here.
Lucas Nolan is a reporter for Breitbart News covering issues of free speech and online censorship.
