Jury selection is set to begin this week in the Oakland federal court that will decide whether OpenAI defrauded Elon Musk when the artificial‑intelligence research lab restructured from a nonprofit into a for‑profit public benefit corporation. The nine jurors who will be chosen will hear arguments from Musk, who alleges the company’s leadership, including CEO Sam Altman and President Greg Brockman, misrepresented the terms of his roughly $38 million contribution.
The dispute traces back to 2015, when Altman emailed Musk about the possibility of a private “Manhattan Project” for AI. Both men later co‑founded OpenAI as a nonprofit, pledging to advance digital intelligence for humanity’s benefit. By 2017, the organization’s leaders agreed that a for‑profit arm was essential to raise the capital needed for advanced research. OpenAI created a “capped‑profit” entity in 2019, limiting investor returns while retaining a nonprofit parent.
After the explosive success of ChatGPT in 2022, the capped‑profit model proved restrictive. In October 2024, OpenAI secured a $6.6 billion funding round and, following negotiations with Microsoft—the for‑profit’s largest investor—and state attorneys general, converted the for‑profit arm into a public benefit corporation. The nonprofit, now called the OpenAI Foundation, holds equity in the for‑profit unit valued at about $130 billion.
Musk, an early donor, argues that the restructuring violated the terms of his donation, which was made without expectation of financial return. He filed an injunction earlier this year to block the reorganization, but the judge denied it, deeming the request “extraordinary and rarely granted.” Now, Musk seeks a jury verdict that would force Altman and Brockman out of their roles, revert OpenAI to a true nonprofit, and redirect any monetary damages back to the nonprofit arm.
Legal scholars say Musk’s chances of undoing the corporate change are slim. District Judge Yvonne Gonzalez Rogers has already signaled reluctance to reverse the settlement reached with the attorneys general of California and Delaware. Professor Michael Dorff of UCLA notes that the judge, not the jury, will decide whether the requested remedy is appropriate, and that the involvement of high‑level government officials makes a court‑ordered undoing unlikely.
Even if the jury finds OpenAI liable for fraud, the damages could vary wildly. Musk’s lawyers are asking for disgorgement ranging from $65.5 billion to $109.43 billion from OpenAI, plus $13.3 billion to $25.06 billion from Microsoft. Dorff predicts the company would prefer a minimalist outcome—essentially returning Musk’s $38 million donation to the nonprofit—while a maximalist award could force Altman’s removal and massive payouts.
Both sides appear prepared for a lengthy trial. Expected witnesses include Microsoft CEO Satya Nadella, former OpenAI board member Shivon Zilis, and Altman himself. The proceedings will likely reveal private communications and internal deliberations, offering a rare glimpse into the decision‑making of two of the tech world’s most influential figures.
Beyond the headline‑grabbing personalities, the case could set a precedent for how AI startups transition between nonprofit and for‑profit models, influencing future fundraising, governance, and donor expectations across the industry.
This article was written with the assistance of AI.
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