{"id":1498,"date":"2026-04-25T03:15:00","date_gmt":"2026-04-24T19:15:00","guid":{"rendered":"https:\/\/obagg.com\/index.php\/2026\/04\/25\/what-you-need-to-know-as-elon-musks-lawsuit-against-sam-altman-begins\/"},"modified":"2026-04-25T03:15:00","modified_gmt":"2026-04-24T19:15:00","slug":"what-you-need-to-know-as-elon-musks-lawsuit-against-sam-altman-begins","status":"publish","type":"post","link":"https:\/\/obagg.com\/index.php\/2026\/04\/25\/what-you-need-to-know-as-elon-musks-lawsuit-against-sam-altman-begins\/","title":{"rendered":"What you need to know as Elon Musk’s lawsuit against Sam Altman begins"},"content":{"rendered":"

In a few short days, jury selection will begin in the long-awaited Musk v. Altman<\/em> case. At the end of that process, an Oakland federal court will task nine regular people with deciding if OpenAI defrauded Elon Musk when it announced, and recently completed, its reorganization to become a more traditional for-profit business<\/a>. More than just being the venue where two billionaires will air their grievances against one another in public, the trial has the potential to reshape the AI industry.<\/p>\n

How did we get here?<\/strong><\/h2>\n

Musk first sued OpenAI in 2024<\/a>, but the seed of the dispute was planted when Sam Altman emailed the billionaire on the evening of May 25, 2015. \u201cBeen thinking a lot about whether it\u2019s possible to stop humanity from developing AI. I think the answer is most definitely not,\u201d Altman wrote at the time. \u201cIf it\u2019s going to happen anyway, it seems like it would be good for someone other than Google to do it first. Any thoughts on whether it would be good for [Y Combinator] to start a Manhattan Project for AI?\u201d<\/p>\n

\u201cProbably worth a conversation,\u201d Musk responded a couple of hours later. That same year, OpenAI announced itself to the world<\/a>, with Altman and Musk as co-chairs of the new joint venture. \u201cOpenAI is a nonprofit artificial intelligence research company. Our goal is to advance digital intelligence in the way that is mostly likely to benefit humanity as a whole, unconstrained by a need to generate financial return. Since our research is free from financial obligations, we can better focus on a positive human impact.\u201d<\/p>\n

If we\u2019re to believe OpenAI\u2019s telling of the events that followed<\/a>, by 2017, almost everyone at the company, including Musk, agreed that a for-profit entity \u201chad to be part of the next phase for OpenAI,\u201d due to the enormous amount of investment needed to pursue its original mission. At some point before Musk left OpenAI\u2019s board of directors in February 2018, OpenAI claims he demanded full control of the company, with the intent to eventually merge it with Tesla.<\/p>\n

Following Musk\u2019s departure, OpenAI created its for-profit arm<\/a> in 2019, which at the time was organized under a \u201ccapped-profit\u201d structure designed to limit investor returns to 100x, with any excess windfalls flowing to the company\u2019s nonprofit. The idea being that if OpenAI achieved artificial general intelligence, its nonprofit would be the greatest beneficiary. However, after the success of ChatGPT in 2022, that structure became problematic for OpenAI as the company sought to raise ever more capital, and as part of its $6.6 billion funding round<\/a> in October 2024, it reportedly agreed<\/a> to a less-than-two-year deadline to free its for-profit from control of the nonprofit.<\/p>\n

\u201cAt the heart of this trial is that OpenAI began as a non-profit organization, and then decided that it needed to be a for-profit organization in order to raise the enormous sums of money it needed to develop the technology it wanted to create,\u201d explains Professor Michael Dorff<\/a>, executive director of the Lowell Milken Institute for Business Law and Policy at UCLA. \u201cThat is a very troublesome transition under the law.\u201d<\/p>\n

Earlier this year, following protracted negotiations with Microsoft (the for-profit\u2019s largest investor) and the state attorneys general of California and Delaware, OpenAI announced<\/a> the successful reorganization of its corporate structure. As things stand, the for-profit is now a public benefit corporation, making it more appealing to investors looking for an uncomplicated return structure. Meanwhile, the nonprofit \u2014 now known as the OpenAI Foundation \u2014 holds equity in the for-profit arm, a stake valued at $130 billion at the time the agreement was announced.\u00a0<\/p>\n

At the end of last year, Musk filed an injunction<\/a> to prevent the reorganization from going through but failed. As an early donor to OpenAI, Musk will not see a single cent of money come his way when the company holds an initial public offering, on account of the fact donations are made with no expectation of any return. Musk has therefore argued OpenAI\u2019s founding group, including CEO Sam Altman and President Greg Brockman, defrauded him as a donor.<\/p>\n

Determining the exact amount Musk contributed to OpenAI was an early question during pre-trial discovery. You see, Musk has greatly exaggerated<\/a> his monetary contributions. As recently as March 2023<\/a>, the billionaire regularly claimed he had donated about $100 million to OpenAI. He later cut that estimate by half, telling CNBC<\/em> in May 2023<\/a>: \u201cI\u2019m not sure the exact number but it\u2019s some number on the order of $50 million.\u201d In recent court filings, that number was again revisited to $38 million<\/a>, and it\u2019s the number that currently stands.<\/p>\n

What\u2019s at stake for OpenAI?<\/strong><\/h2>\n

In his original complaint, Musk\u2019s legal team tried to \u201cthrow the kitchen sink\u201d at OpenAI, says Professor Dorff. In subsequent filings, Musk\u2019s lawyers narrowed down their client\u2019s desired set of outcomes to a handful of remedies. Should the jury rule in his favor, Musk has requested the court force Altman and Brockman to step down, and for OpenAI to restructure as \u201ca bona fide public charity that operates as the nonprofit it was intended to be, consistent with its founding charter and mission.\u201d He’s also made the highly unusual request<\/a> that any monetary damages which would be awarded to him in the verdict be redirected to OpenAI’s own nonprofit arm.<\/p>\n

According to Professor Dorff, it\u2019s highly unlikely Musk will be able to undo OpenAI\u2019s reorganization. For one, District Judge Yvonne Gonzalez Rogers has already signaled her reluctance to do just that \u2014 and it\u2019s her, not the jury, who will get to decide if that\u2019s an appropriate remedy. Effectively, Musk is asking the judge to \u201cunscramble the eggs\u201d of a complicated corporate restructuring.<\/p>\n

\u201cThere was a moment where that might have been possible, when the attorneys general of Delaware and California intervened and came to the current compromise,\u201d explains Dorff. \u201cWhether you agree or disagree with what the AGs decided to do, I think it’s unlikely the court will feel it’s appropriate to undo that compromise because of all the high government officials involved who, in theory, had all of the right incentives.\u201d When Musk filed his request for a preliminary injunction to stop OpenAI\u2019s conversion to a for-profit company, the judge said the request was \u201cextraordinary and rarely granted<\/a>.\u201d The fact Musk is deeply involved with OpenAI’s competitor xAI \u201cmay also weigh heavily on the judge’s mind,\u201d Droff adds.<\/p>\n

Far more uncertain is how Musk\u2019s other demands could play out, since the jury will decide if OpenAI is guilty of defrauding him. According to Dorff, most high-stakes business cases end with the two sides settling because of the risk of involving a jury in the outcome. \u201cI just don\u2019t see that happening here given the tenor of the dispute,\u201d he says. \u201cIt seems unlikely either side will settle.\u201d<\/p>\n

If the case does end in a jury decision, it will then be up to those nine people, with guidance from the judge, to decide on monetary damages. \u201cThat will be very difficult to figure out because there is a maximalist version of this, and a minimalist version of this. They\u2019re very different numbers and the result could be anywhere in between the two,\u201d says Dorff. Musk\u2019s legal team is seeking a disgorgement of between $65.5 billion and $109.43 billion from OpenAI (and between $13.3 billion and $25.06 billion from Microsoft, which is a co-defendant in the case).\u00a0In a worse case scenario, Professor Dorff suggests Altman might lose the confidence of OpenAI\u2019s board, costing him his position as CEO. He might even be forced to write some checks to settle the disgorgements.<\/p>\n

Dorff suspects OpenAI \u201cwould love\u201d the minimalist version where Musk is rewarded his $38 million donation back. Should some other disgruntled donors emerge to sue OpenAI for fraud, the Musk v. Altman<\/em> case would make it easier to litigate those cases, given \u201cthe map has been drawn as to which legal claims are likely to succeed,\u201d says Dorff. However, those would amount to \u201ctraffic tickets\u201d for OpenAI.<\/p>\n

Whatever happens next, it should be an eventful trial. With public testimonies from Microsoft CEO Satya Nadella, former OpenAI board member and Musk confidant Shivon Zilis and even Altman himself a likelihood, we’ll at the very least be treated to a wealth of formerly private communications \u2014 and some new piece of vocabulary<\/a> \u2014 between some of the richest people in the tech space.\u00a0<\/p>\n

This article originally appeared on Engadget at https:\/\/www.engadget.com\/ai\/what-you-need-to-know-as-elon-musks-lawsuit-against-sam-altman-begins-191500726.html?src=rss<\/p>

Please credit: OBA Blog<\/a> » What you need to know as Elon Musk’s lawsuit against Sam Altman begins<\/a><\/p>","protected":false},"excerpt":{"rendered":"

In a few short days, jury selection will begin in the long-awaited Musk v. Altman case. At the end of that process, an Oakland federal court will task nine regular people with deciding if OpenAI defrauded Elon Musk when it announced, and recently completed, its reorganization to become a more traditional for-profit business. More than just being the venue where two billionaires will air their grievances against one another in public, the trial has the potential to reshape the AI industry. How did we get here? Musk first sued OpenAI in 2024, but the seed of the dispute was planted when Sam Altman emailed the billionaire on the evening of May 25, 2015. \u201cBeen thinking a lot about whether it\u2019s possible to stop humanity from […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-1498","post","type-post","status-publish","format-standard","hentry","category-share"],"_links":{"self":[{"href":"https:\/\/obagg.com\/index.php\/wp-json\/wp\/v2\/posts\/1498","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/obagg.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/obagg.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/obagg.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/obagg.com\/index.php\/wp-json\/wp\/v2\/comments?post=1498"}],"version-history":[{"count":0,"href":"https:\/\/obagg.com\/index.php\/wp-json\/wp\/v2\/posts\/1498\/revisions"}],"wp:attachment":[{"href":"https:\/\/obagg.com\/index.php\/wp-json\/wp\/v2\/media?parent=1498"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/obagg.com\/index.php\/wp-json\/wp\/v2\/categories?post=1498"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/obagg.com\/index.php\/wp-json\/wp\/v2\/tags?post=1498"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}