OpenAI Wins Elon Musk Lawsuit, Clearing Path for Potential IPO

A US jury on Monday ruled against Elon Musk in his lawsuit against OpenAI, finding that the artificial intelligence company was not liable for allegedly straying from its original mission of benefiting humanity.

In a unanimous verdict, the jury in federal court in Oakland, California, said Musk had filed the case too late. Jurors deliberated for less than two hours.

The three-week trial had widely been viewed as a defining moment for the future of OpenAI and artificial intelligence more broadly, particularly over how the technology should be used and who should benefit from it.

The ruling clears a major obstacle for OpenAI as it considers a potential initial public offering that could value the company at $1 trillion.

However, OpenAI chief executive Sam Altman still faces reputational challenges following highly personal testimony during the trial, with several witnesses describing him as dishonest.

Musk said he would appeal the decision, repeating allegations that Altman and OpenAI president Greg Brockman viewed the company as a route to immense wealth.

“Altman and Brockman did in fact enrich themselves by stealing a charity. The only question is when they did it,” Musk posted on X. “Creating a precedent to loot charities is incredibly destructive to charitable giving in America.”

US District Judge Yvonne Gonzalez Rogers, who oversaw the case, said Musk could face difficulty in overturning the verdict because the statute of limitations issue was a factual matter already decided by the jury.

“There’s a substantial amount of evidence to support the jury’s finding, which is why I was prepared to dismiss on the spot,” the judge said.

Musk Invested Early in OpenAI

In his lawsuit, Musk accused OpenAI, Altman and Brockman of persuading him to contribute $38 million before later attaching a for-profit arm to the original non-profit organisation and securing tens of billions of dollars from Microsoft and other investors.

Marc Toberoff, a lawyer representing Musk, said the verdict could encourage other start-ups founded as non-profits to establish profit-driven entities and enrich executives and directors.

“It’s a brand-new formula for Silicon Valley,” he told reporters.

OpenAI was founded in 2015 by Altman, Musk and several others. Musk left the board in 2018, and the company established a for-profit business the following year.

Musk has since launched his own artificial intelligence company, xAI, which is now part of SpaceX.

OpenAI argued that Musk himself was motivated by commercial interests and waited too long to claim the company had breached its founding agreement to develop safe artificial intelligence for the public good.

Its lawyers said Musk’s August 2024 lawsuit fell outside the three-year statute of limitations because he had known about OpenAI’s expansion plans years earlier.

Bill Savitt, a lawyer for OpenAI, described the lawsuit as an “after-the-fact contrivance that bears no relationship to reality” and a “hypocritical attempt to sabotage a competitor”.

Dan Ives, an analyst at Wedbush, said the verdict removed a significant overhang from any future OpenAI IPO.

“This is a huge win for Altman and OpenAI despite the scrapes and bruises to Altman’s reputation and leadership,” he said.

The verdict followed 11 days of testimony and arguments in which both Musk’s and Altman’s credibility came under repeated scrutiny.

Microsoft had also faced an aiding-and-abetting claim during the proceedings. A Microsoft executive testified that the company had invested more than $100 billion in its partnership with OpenAI.

“The facts and timeline in this case have long been clear and we welcome the jury’s decision to dismiss these claims as untimely,” a Microsoft spokesperson said.

Credibility and AI Safety in Focus

Artificial intelligence is increasingly being used in areas such as education, facial recognition, financial advice, journalism, legal research, medical diagnosis and deepfake content generation.

Many people, however, remain wary of the technology and fear it could displace workers or be misused.

Throughout the trial, each side accused the other of prioritising profit over the public interest.

Musk argued that OpenAI failed to prioritise AI safety and instead focused on enriching investors and insiders at the expense of its original non-profit mission. He also claimed Microsoft was aware that OpenAI’s commercial ambitions outweighed its altruistic goals.

Steven Molo, another lawyer for Musk, reminded jurors during closing arguments that several witnesses had questioned Altman’s honesty and credibility. He noted that Altman did not give an unequivocal yes when asked whether he considered himself completely trustworthy.

“Sam Altman’s credibility is directly at issue,” Molo said. “If you do not believe him, they cannot win.”

Sarah Eddy, representing the OpenAI defendants, accused Musk and his legal team of relying on “sound bites and irrelevant false accusations”.

Meanwhile, SpaceX is reportedly preparing for an IPO that could surpass OpenAI’s in scale.

 

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