Judge denies Musk’s request to block OpenAI’s conversion to for-profit company

A federal judge in the US has denied Elon Musk’s request for a court order blocking OpenAI from converting itself to a for-profit company.

However, the judge said she could expedite a trial to consider Mr Musk’s claims against the ChatGPT maker and its chief executive.

US District Judge Yvonne Gonzalez Rogers ruled that Mr Musk “has not demonstrated likelihood of success on the merits” in his request for a preliminary injunction.

She offered to hold a trial in her California courtroom as soon as this autumn, “given the public interest at stake and potential for harm if a conversion contrary to law occurred”.

Mr Musk, an early OpenAI investor, began a legal offensive against the ChatGPT maker and chief executive Sam Altman a year ago, suing for breach of contract over what he said was the betrayal of its founding aims as a non-profit.

He escalated the legal dispute late last year, adding new claims and defendants, including Microsoft, and asking for a court order that would stop OpenAI’s plans to convert itself into a for-profit business.

Mr Musk also added his own AI company, xAI, as a plaintiff, claiming that OpenAI was unfairly stifling business competition.

He and a group of investors more recently made an unsolicited 97.4 billion dollar bid to buy a controlling stake in the non-profit — a move that undermined Mr Musk’s “claim of irreparable harm”, the judge wrote.

OpenAI said it welcomed the court’s decision.

“This has always been about competition,” a statement from the company said. “Elon’s own emails show that he wanted to merge a for-profit OpenAI into Tesla. That would have been great for his personal benefit, but not for our mission or US interests.”

Mr Musk alleges in the lawsuit that the companies are violating the terms of his foundational contributions to the charity. He had invested about 45 million dollars in the start-up from its founding until 2018, his lawyer has said.

Musk lawyer Marc Toberoff said in a statement late Tuesday that he is pleased that the court offered an expedited trial on the core claims.

“We look forward to a jury confirming that Altman accepted Musk’s charitable contributions knowing full well they had to be used for the public’s benefit rather than his own enrichment,” Mr Toberoff said.

The judge, in a hearing last month, called it a “ stretch” to claim “irreparable harm” to Mr Musk, and she called the case “billionaires vs. billionaires”.

She questioned why Mr Musk invested tens of millions in OpenAI without a written contract.

Mr Toberoff responded that it was because the relationship between Mr Altman and Mr Musk at the time was “built on trust” and the two were very close.

“That is just a lot of money” to invest “on a handshake”, the judge said.

The dispute has roots in a 2017 internal power struggle at the fledgling start-up that led to Mr Altman becoming OpenAI’s chief executive.

Emails disclosed by OpenAI show Mr Musk had also sought to be chief executive and grew frustrated after two other OpenAI co-founders said he would hold too much power as a major shareholder and chief executive if the start-up succeeded in its goal to achieve better-than-human AI known as artificial general intelligence.

Mr Musk has long voiced concerns about how advanced forms of AI could threaten humanity.

Mr Altman eventually succeeded in becoming chief executive and has remained so except for a period in 2023 when he was fired and then reinstated days later after the board that ousted him was replaced.