Musk–Altman trial opens: Revisiting OpenAI’s shift from nonprofit to for-profit

Opening arguments are set to begin on Tuesday in a federal courtroom in Oakland, California, in Elon Musk vs Sam Altman, a case focussed on whether OpenAI deviated from its founding structure and mission.

Musk, a cofounder of OpenAI, alleges that the organisation breached its original commitment to operate as a nonprofit and instead evolved into a profit-driven enterprise. OpenAI and its chief executive Sam Altman deny the claim, stating that structural changes were both necessary and consistent with the organisation’s long-term goals.

The dispute dates back to OpenAI’s founding in December 2015 as a nonprofit entity with the stated objective of ensuring that artificial general intelligence (AGI) “benefits all of humanity.” At the time, the organisation’s founders, including Musk and Altman, pledged funding and designed the organisation to prioritise research outcomes over financial returns, as reported by AFP.


Musk left OpenAI in 2018 following disagreements with the board. In the period that followed, the organisation faced increasing financial demands associated with developing advanced AI systems.

In 2019, OpenAI introduced a for-profit subsidiary, OpenAI LP, under a “capped-profit” model. This structure allowed the company to raise external capital while limiting investor returns. At the time, OpenAI stated that no existing legal structure adequately balanced capital needs with its mission, ET had reported citing news website Semafor.

That same year, Microsoft invested $1 billion in OpenAI, becoming a key partner and providing cloud infrastructure for its systems.

Under a recently reworked agreement, Microsoft will no longer have exclusive access to OpenAI’s models and products. Microsoft is expected to remain OpenAI’s primary cloud partner and will retain access to its technology, including the intellectual property behind ChatGPT, through at least 2032.

Musk has since questioned the transition, arguing that a nonprofit he supported financially had effectively become a large commercial enterprise. He has publicly questioned how such a transformation aligns with the organisation’s original mandate.

Between 2019 and 2023, Microsoft invested more than $13 billion in OpenAI, which gave the tech giant roughly 49% of OpenAI's future profits. OpenAI maintains that its nonprofit entity continues to oversee and control the for-profit arm, preserving its governance framework. However, the corporate structure has continued to evolve.

Transition to public benefit corporation

In October 2025, OpenAI outlined plans to further modify its for-profit arm, including proposals to convert it into a public benefit corporation and revise investor return limits.

The restructuring followed discussions with regulators, including the attorneys general of Delaware and California, who did not oppose the changes after reviewing how the structure balances commercial and public-interest objectives.

Under the revised framework, the nonprofit, which is now referred to as the OpenAI Foundation, retains control of the for-profit entity and holds significant governance authority.

According to board chair Bret Taylor, the changes are intended to simplify corporate structure while enabling greater access to the capital required for developing advanced AI systems.

Also Read: Explained: OpenAI and Microsoft's new agreement allowing major restructuring

The nonprofit board continues to oversee operations, including through a Safety and Security Committee with the authority to review and potentially halt the release of new technologies.

OpenAI has projected substantial financial commitments in the coming years, including large-scale investments in global data centre infrastructure and agreements with chipmakers such as Nvidia, AMD, and Broadcom last year. It is also expanding its computing capacity through partnerships with companies such as Oracle and SoftBank.

Musk’s lawsuit, filed in 2024 and now proceeding to trial, argues that these structural changes constitute a departure from OpenAI’s founding agreement and mission.

OpenAI, valued at over $850 billion and eyeing a listing, has called the lawsuit "baseless" and driven by jealousy.