OpenAI and Microsoft Lose Final Chance to Avoid Trial with Musk

OpenAI and Microsoft are facing a trial due to Elon Musk’s claims that Sam Altman’s startup has strayed from its original mission as a public charity by accepting billions in funding from the software company and operating as a for-profit entity.

A federal judge in Oakland, California, ruled on Thursday against OpenAI and Microsoft’s requests to dismiss Musk’s allegations, scheduling a jury trial for late April. Musk, who played a pivotal role in founding OpenAI alongside Altman and others in 2015, launched his own AI company in 2023.

“Mr. Musk’s lawsuit is baseless and part of his ongoing pattern of harassment; we look forward to demonstrating this in court,” OpenAI stated. “Our primary focus remains on supporting the OpenAI Foundation, one of the most well-resourced nonprofits ever created.”

In her ruling, US District Judge Yvonne Gonzalez Rogers rejected efforts to dismiss Musk’s claim that OpenAI has failed to uphold its commitment to operate as a charitable trust.

She acknowledged that while the evidence might be unclear, Musk claims his donations to OpenAI “were intended for a specific charitable purpose” and included key conditions: that OpenAI stay open source and follow nonprofit activities consistent with its charter and mission.

Disagreeing with OpenAI’s stance, the judge determined that Musk’s use of an intermediary to contribute $38 million in initial funding does not eliminate his legal right to enforce these conditions.

“To rule otherwise would greatly obstruct the enforcement of many charitable trusts, which contradicts contemporary practices,” she remarked.

The judge also permitted Musk’s fraud claims to proceed, citing emails and private notes from OpenAI co-founder Greg Brockman dating back to 2017. In a September email, Brockman expressed to Musk his intention to “maintain the non-profit structure” of OpenAI.

According to the ruling, a private note revealed two months later: “I cannot confirm we are committed to the non-profit. I don’t want to assert that we’re committed. If we’re shifting to a b-corp in three months, that would be misleading.”

Gonzalez Rogers indicated that it would be the jury’s job to decide if Microsoft assisted OpenAI in breaching its obligations to donors, including Musk.

“In this case, Musk has provided substantial evidence suggesting that Microsoft had actual knowledge, beyond mere suspicion, of any wrongdoing,” she stated.

However, the judge dismissed Musk’s assertion that Microsoft gained “unjust” benefits at his expense, highlighting that Musk would need to demonstrate at least a “quasi-contractual relationship” with Microsoft.

“Furthermore, Musk did not provide evidence or present any facts to support a claim that Microsoft’s retention of benefits was unjust,” the judge noted.

Musk’s lawyer, Marc Toberoff, and Microsoft representatives did not respond immediately to requests for comments.

OpenAI, which recently achieved a valuation of $500 billion, announced a restructuring in October. At that time, it revealed that it granted Microsoft a 27% ownership stake during a transition aimed at ensuring the startup’s nonprofit arm retains control over its for-profit operations.

This shift to a public benefit corporation aligns with Altman’s long-term ambitions as CEO.

Since 2024, Musk and Altman have been caught in a legal battle over OpenAI’s future, with Musk’s xAI emerging as one of OpenAI’s main competitors. Last year, OpenAI rejected Musk’s unsolicited $97.4 billion offer to acquire the assets of the nonprofit governing the company.

Altman has criticized Musk’s lawsuit contesting OpenAI’s restructuring as a misuse of the legal system aimed at stifling a competitor.

© 2026 Bloomberg

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