A District Court judge has rejected Elon Musk’s attempt to block OpenAI’s for-profit model, delivering an early legal setback to the Tesla CEO. Judge Yvonne Gonzalez Rogers ruled that Musk failed to meet “the high burden required for a preliminary injunction,” allowing OpenAI to continue its business model.
Despite the ruling, Musk’s lawsuit against OpenAI will proceed, with both parties agreeing to an expedited trial scheduled for this fall.
Musk vs. OpenAI
Musk co-founded OpenAI in 2015 with Sam Altman and others, initially as a nonprofit organization aimed at developing AI for the benefit of humanity. OpenAI quickly gained recognition as one of the most innovative AI startups at the time. Musk then contributed tens of millions of dollars to the cause before stepping down from the board in 2018, citing his commitments as Tesla’s CEO.
As TechnologyAdvice staff writer Megan Crouse wrote on eWeek in February 2025, “OpenAI’s corporate structure is unusual. Two for-profit entities, OpenAI GP LLC and OpenAI Global LLC, are owned by OpenAI, Inc, the nonprofit dedicated to ‘ensuring that safe artificial intelligence is developed and benefits all of humanity.” In September 2024, OpenAI announced it would restructure so the nonprofit has a minority stake in the for-profit companies.”
OpenAI eventually secured billions in funding; it has also gained the reputation as one of the top AI companies globally. Musk claimed this shift breached the company’s founding principles, prompting him to file a lawsuit in February 2024. The legal challenge argues that OpenAI’s leadership violated their original commitments and misused funding intended for nonprofit AI research.
OpenAI’s defense
In February 2025, a group led by Musk reportedly offered $97.4 billion to purchase OpenAI outright — a bid that Altman and the company rejected.
According to OpenAI, its embrace of a for-profit model is needed in order to secure the necessary capital for future AI development. Their team argued that Musk’s lawsuit is just a ploy meant to slow the ongoing development of the OpenAI platform, which is a major competitor to Musk’s xAI brand and its large language models (LLMs) – including the Grok AI platform.
Preparing for the legal battle ahead
Both Musk and Altman face a contentious legal fight that could reshape AI governance and corporate ethics. Musk’s legal team welcomed the decision to fast-track the trial, but the denied injunction hands OpenAI an early victory.