Musk Fails in Bid to Block OpenAI Becoming for-Profit Business

Elon Musk speaks during the first cabinet meeting hosted by US President Donald Trump, at the White House in Washington, DC, US, February 26, 2025. REUTERS/Brian Snyder
Elon Musk speaks during the first cabinet meeting hosted by US President Donald Trump, at the White House in Washington, DC, US, February 26, 2025. REUTERS/Brian Snyder
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Musk Fails in Bid to Block OpenAI Becoming for-Profit Business

Elon Musk speaks during the first cabinet meeting hosted by US President Donald Trump, at the White House in Washington, DC, US, February 26, 2025. REUTERS/Brian Snyder
Elon Musk speaks during the first cabinet meeting hosted by US President Donald Trump, at the White House in Washington, DC, US, February 26, 2025. REUTERS/Brian Snyder

A US judge on Tuesday denied Elon Musk's request to prevent OpenAI from becoming a for-profit business in a loss for the Tesla tycoon amid his feud with Sam Altman.

US District Court Judge Yvonne Gonzalez Rogers ruled that Musk and his xAI startup failed to prove an injunction against OpenAI was necessary as the case heads to trial.

Musk sued in California federal court to stop OpenAI from transitioning from a nonprofit to a for-profit business, arguing the startup violated antitrust law and betrayed his trust in their mission as a co-founder of OpenAI.

The judge wrote that, while Musk did not prove the need for an injunction, she is prepared to expedite a trial on that claim later this year.

The ruling leaves OpenAI free to continue its transition from nonprofit to for-profit enterprise.

Musk's injunction bid argued that OpenAI's co-founders, including chief executive Altman, "took advantage of Musk's altruism in order to lure him into funding the venture," according to court documents.

Musk contended in filings that it was clear his backing of OpenAI was contingent on it remaining a nonprofit, offering a few email exchanges to support the claim.

"Whether Musk's emails and social media posts constitute a writing sufficient to constitute an actual contract or charitable trust between the parties is debatable," the judge said in her ruling.

OpenAI's board chairman in February rejected a Musk-led offer to buy the valuable artificial intelligence company for $97.4 billion.

"OpenAI is not for sale, and the board has unanimously rejected Mr. Musk's latest attempt to disrupt his competition," OpenAI Board Chair Bret Taylor said in a statement posted by the company on Musk-owned X, formerly Twitter.

OpenAI currently operates in a hybrid structure, as a nonprofit with a money-making subsidiary.

The change to a for-profit model -- one that Altman considers crucial for the company's development -- has exacerbated ongoing tensions with Musk.

Musk and Altman were among the 11-person team that founded OpenAI in 2015, with the former providing initial funding of $45 million.

Three years later, Musk departed the company, with OpenAI citing "a potential future conflict for Elon... as Tesla continues to become more focused on AI."

Musk established his own artificial intelligence company, dubbed xAI, in early 2023 after OpenAI ignited global fervor over the technology.

The massive cost of designing, training, and deploying AI models has compelled OpenAI to seek a new corporate structure that would give investors equity and provide more stable governance.



Trump Offers Support to Musk's Car Company in a Surprising Post as Tesla Stock Plunges

Mar 22, 2025; Philadelphia, PA, USA; Elon Musk and President Donald Trump during the Division I Men's Wrestling Championship held at Wells Fargo Center. Mandatory Credit: Eric Hartline-Imagn Images/File Photo
Mar 22, 2025; Philadelphia, PA, USA; Elon Musk and President Donald Trump during the Division I Men's Wrestling Championship held at Wells Fargo Center. Mandatory Credit: Eric Hartline-Imagn Images/File Photo
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Trump Offers Support to Musk's Car Company in a Surprising Post as Tesla Stock Plunges

Mar 22, 2025; Philadelphia, PA, USA; Elon Musk and President Donald Trump during the Division I Men's Wrestling Championship held at Wells Fargo Center. Mandatory Credit: Eric Hartline-Imagn Images/File Photo
Mar 22, 2025; Philadelphia, PA, USA; Elon Musk and President Donald Trump during the Division I Men's Wrestling Championship held at Wells Fargo Center. Mandatory Credit: Eric Hartline-Imagn Images/File Photo

President Donald Trump took to social media Thursday morning to support Elon Musk's car company, a startling development given their bitter public feud.

”I want Elon, and all businesses within our Country, to THRIVE,” Trump wrote on Truth Social, Reuters reported.

The post wasn't enough to help Tesla's stock, which fell sharply after the company reported another quarter of lackluster financial results and Musk warned of some potentially “rough quarters” into next year. At midday, the stock was down around 9%.

Late Wednesday, Tesla said revenue fell 12% and profit dropped 16% in the April-June quarter. Many prospective buyers have been turned off by Musk’s foray into right-wing politics, and the competition has ramped up in key markets such as Europe and China.

Investors have been unnerved by Musk's social media spat with the president because Trump has threatened to retaliate by ending government contracts and breaks for Musk's various businesses, including Tesla.

But Trump struck a starkly different tone Thursday morning.

“Everyone is stating that I will destroy Elon’s companies by taking away some, if not all, of the large scale subsidies he receives from the US Government. This is not so!" Trump wrote. “The better they do, the better the USA does, and that’s good for all of us.”

After Trump's massive budget bill passed earlier this month, Tesla faces the loss of the $7,500 EV tax credit and stands to make much less money from selling regulatory credits to other automakers. Trump’s tariffs on countries including China and Mexico will also cost Tesla hundreds of millions of dollars, the company said on its earnings call.

Musk has blasted the budget bill on his own social media platform X for adding to US debt at a time when it is already too large. The Tesla CEO has called the budget pushed by the president a “disgusting abomination” and has threatened to form a new political party.

On Wednesday's call, Musk said the electric vehicle maker will face “a few rough quarters” as it moves into a future focused less on selling cars and more on offering people rides in self-driving cars. He also talked up the company's business making humanoid robotics. But he acknowledged those businesses are a ways off from contributing to Tesla’s bottom line.

Tesla began a rollout in June of its paid robotaxi service in Austin, Texas, and hopes to introduce the driverless cabs in several other cities soon. Musk told analysts that the service will be available to probably “half of the population of the US by the end of the year — that’s at least our goal, subject to regulatory approvals.”

“We’re in this weird transition period where we’ll lose a lot of incentives in the US,” Musk said, adding that Tesla “probably could have a few rough quarters” ahead. He added, though, “Once you get to autonomy at scale in the second half of next year, certainly by the end of next year, I would be surprised if Tesla’s economics are not very compelling.”