Elon Musk is ramping up his efforts to stop OpenAI from becoming a for-profit company, filing an injunction with the U.S. District Court for the Northern District of California.

Musk was one of OpenAI’s co-founders. The company was formed to develop AI responsibly, ensuring it could be used safely without posing a threat to humanity. Musk, in particular, has been vocal in his belief that AI poses one of the greatest existential threats humanity has ever seen.

In recent years, OpenAI has seemingly strayed from its original mission, with individuals inside and outside the company CEO Sam Altman has become more concerned with chasing profit. The shift in direction has led some of the firm’s most talented engineers to leave, especially after a failed attempt to oust Altman as CEO. Musk himself left OpenAI in 2018 over disagreements about the company’s plans and what it was trying to accomplish.

With OpenAI’s recent announcement that it would convert from a non-profit to a for-profit company, Musk is taking action by filing an injunction in an effort to stop the process.

As detailed in the Proposed Order submitted with this Motion, Plaintiffs seek an order enjoining Defendants, as well as their officers, agents, servants, employees, attorneys, and all other persons in active concert or participation with Defendants, during the pendency of this litigation, from: (1) directly or indirectly undertaking any action for the purpose of, or tending to have the effect of, making, enforcing, or furthering agreements not to invest in OpenAI’s competitors, such as xAI; (2) directly or indirectly undertaking any action for the purpose of, or tending to have the effect of, interlocking directorates or benefitting from wrongfully obtained competitively sensitive information or coordination via the Microsoft-OpenAI board interlocks; (3) directly or indirectly undertaking any action for the purpose of, or tending to have the effect of, furthering the conversion of OpenAI, Inc. to a for-profit enterprise or transferring any material assets, including intellectual property owned, held, or controlled by OpenAI, Inc., its subsidiaries, or affiliates; and/or (4) directly or indirectly undertaking any action for the purpose of, or tending to have the effect of, causing OpenAI, Inc. to contract or do business with any entity in which any Defendant has a material financial interest.

The Anti-Competitive Argument

As the above section of the motion highlights, Musk is also concerned that OpenAI, along with investor Microsoft, could sway investors not to invest in competing platforms, such as Musk’s xAI. The injunction goes on to claim that OpenAI and Microsoft have violated the Sherman Act, as well as the Clayton act by coordinating their efforts despite being competitors, including through the use of Microsoft’s seat on OpenAI’s board of directors.

Indeed, the very reason Microsoft obtained its board seat was to coordinate business decisions with OpenAI. After the board fired Altman, Microsoft’s CEO, Satya Nadella, expressed frustration that Microsoft had not been consulted, and he vowed Microsoft would be more involved moving forward to avoid further “surprises.” In an interview four days after Altman’s firing, Nadella spoke on the matter:

As a partner, I think it does mean that you deserve to be consulted on big decisions . . . So all I said [to OpenAI, Inc.’s board] is ‘Hey, whatever it is that you’re doing, just make sure that you don’t compromise the mission of the organization in which we have invested and the people who are behind that that we bet on.’ . . . One thing I’ll be very, very clear on is we are never going to get back into a situation where we get surprised like this ever again . . . We’ll definitely take care of all of the governance issues and anything else. And as I said, we have all the rights, so therefore we will make sure that we are very, very clear that the governance gets fixed in a way that we really have maturity and guarantee that we don’t have surprises.

Eight days later, Microsoft obtained its seat on OpenAI, Inc.’s board. Tellingly, Microsoft withdrew from OpenAI, Inc.’s board in July 2024 amid intense antitrust scrutiny from U.S. and European regulators.

The Charitable Trust Clause

The injunction also makes the case that OpenAI cannot legally change to a for-profit corporation without violating the terms associated with donations Musk made to OpenAI. The legal precedent in question is a California law that stipulates a charity must abide by terms attached to any donations it receives. In particular, “[a] person with a reversionary, contractual, or property interest in the assets subject to [a] charitable trust” is entitled to “bring an action to enjoin, correct, obtain damages for or to otherwise remedy a breach of a charitable trust.”

The injunction goes on to outline Musk’s original investment in the company, along with the attached conditions.

Here, Musk manifested an intent to serve a charitable purpose, i.e., that OpenAI, Inc. would be a non-profit devoted to the development of safe and largely open-source generative AI. FAC ¶¶ 86-90. He provided cash and other property to a charitable corporation. Id. ¶ 96. No later than September 20, 2017, when he wrote “continue with OpenAI as a non-profit [or] I will no longer fund OpenAI,” id. ¶ 103, Musk manifested a clear intent that his contributions be managed according to his wishes. As a result, there is a charitable trust.

There can be no serious question that OpenAI’s imminent conversion to a for-profit entity violates the terms of Musk’s donations. And, according to Defendants, they have already transferred away and locked down nearly all “the foundation[’s]” “technology,” for private gain, id. ¶¶ 129-130, 177-80, while safety is now, at best, window dressing, id. ¶¶ 184- 93, 396-401.

Conclusion

Musk’s attorneys are asking the court to put a hold on OpenAI’s transition until a court can decided the merits of an existing lawsuit challenging OpenAI’s actions.

No objective observer can look at OpenAI today and say it bears any resemblance whatsoever to what it promised to be. Enough is enough.

Plaintiffs respectfully request that the Court maintain the status quo and pause Defendants’ worsening behavior until final disposition.

Only time will tell if Musk’s claims have merit. If they do, however, it could spell disaster for OpenAI, as much of the investment it received in its latest round included the condition that the company transition to a for-profit within two years or forfeit the investment. If OpenAI fails in its transition, and investors demand their money back, it could ruin the AI firm.