Key Takeaways
- Elon Musk testified for a second day in his lawsuit against OpenAI, claiming the nonprofit strayed from its original mission when a for‑profit arm was created.
- Musk argues that OpenAI’s partnership with Microsoft—especially a $10 billion investment—constitutes a violation of the charitable trust and threatens independent AGI development.
- OpenAI’s legal team characterizes the case as “sour grapes,” asserting Musk is trying to undermine a rival after he departed the organization in 2018 and launched his own AI venture, xAI.
- The court’s decision could reshape how AI research balances nonprofit ideals with commercial funding, influencing future governance models for AGI projects.
Background of the Dispute
Elon Musk, co‑founder of OpenAI, is now in federal court alleging that the organization abandoned its founding pledge to develop artificial intelligence “for the benefit of humanity” when it created a for‑profit subsidiary to attract capital. The lawsuit, filed in 2024, centers on a 2020 agreement with Microsoft that granted the tech giant an exclusive license to OpenAI’s models in exchange for a massive investment. Musk contends that this deal transformed OpenAI from a charitable entity into a de‑facto for‑profit firm, thereby breaching the trust placed in it by donors and the public.
Musk’s Opening Testimony
On the stand Wednesday, under questioning from his own attorney, Musk reflected on the moral implications of OpenAI’s structure. He stated, “Establishing a company like OpenAI as a non‑profit gave it the moral high ground. I guess there’s sort of a halo effect.” He added that there is “some value” in having a lab that develops “digital superintelligence” operate as a nonprofit, because it signals a commitment to broad societal benefit rather than shareholder profit.
The “Cake and Eat It Too” Argument
Musk warned against trying to reap the reputational benefits of nonprofit status while simultaneously pursuing profit‑driven growth. “But what you can’t do is have your cake and eat it too,” he said, noting that reaping the “good association” with being a nonprofit and then switching to a for‑profit model undermines the original intent. He described his evolving view of OpenAI in three phases: initial enthusiastic support, a period of uncertainty about mission fidelity, and finally a belief that the organization was “looting the non‑profit.” “We are currently in phase three,” he declared.
Microsoft Investment and Concerns Over Control
A focal point of Musk’s testimony was the $10 billion investment from Microsoft, which he learned about after the deal was announced. He said the size of the infusion made him feel that “the charitable trust had been violated because the size of OpenAI had grown beyond that of a charity.” Musk expressed concern that such a large financial stake would lead Microsoft to expect a substantial return, potentially giving it outsized influence over the direction of artificial general intelligence (AGI). He posed the rhetorical question, “With all due respect to Microsoft, do you really want Microsoft controlling artificial general intelligence?”
Musk’s Reaction and Communication with Altman
Musk recounted his immediate emotional response: “I reacted quite negatively,” he said, adding that he texted Sam Altman with a blunt query—“What the hell is going on?”—or words to that effect. He recalled Altman’s reassurance via text that the product would remain open and available to all, a promise Musk now believes was not honored. The billionaire also disclosed that Altman had offered him an equity stake in the for‑profit arm, which Musk rejected, describing the offer as feeling “like a bribe” because he believed a nonprofit should not hold equity or be valued in the marketplace.
OpenAI’s Counter‑Argument
OpenAI’s lead counsel framed the lawsuit as a case of sour grapes, arguing that Musk is seeking to damage a rival after his departure in 2018 following a leadership disagreement. The attorney pointed out that Musk subsequently founded his own AI company, xAI, in 2023, suggesting a competitive motive behind the litigation. According to OpenAI, the for‑profit subsidiary was created solely to raise funds and attract top talent, and it remains a controlled subsidiary of the OpenAI Foundation, preserving the nonprofit’s oversight.
Implications for AI Governance
The case hinges on whether a nonprofit can ethically spin off a for‑profit arm without betraying its charitable mission. If the court sides with Musk, it could impose stricter limits on how AI research organizations monetize their work, potentially requiring clearer separations between charitable activities and commercial ventures. Conversely, a ruling in favor of OpenAI might affirm that hybrid models are permissible, encouraging other AI labs to pursue similar structures to fund costly AGI research while retaining a nonprofit veneer.
Conclusion
As Musk’s testimony continues under cross‑examination, the courtroom drama underscores a broader debate about the future of AI development: how to balance the pursuit of transformative technology with the imperative that it serve the public good. The outcome will not only affect the parties involved but may also set a precedent for how emerging technologies are governed, funded, and trusted in the years ahead.
https://www.npr.org/2026/04/29/nx-s1-5803833/elon-musk-testimony-openai-altman-day-2