Synopsis
A major legal battle begins Tuesday in Oakland. Elon Musk is suing Sam Altman and OpenAI. Musk claims OpenAI abandoned its nonprofit roots for profit. OpenAI denies this, stating changes were necessary. The case centers on OpenAI's founding mission to benefit all humanity. This dispute highlights the evolving nature of AI development and its commercialization.Listen to this article in summarized format
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.
