Musk Sues OpenAI, Microsoft Over Nonprofit Mission Shift

Jury selection is set to begin in Elon Musk’s 2024 lawsuit against OpenAI, Sam Altman, Greg Brockman, and Microsoft, accusing them of betraying OpenAI’s nonprofit mission by creating a for-profit entity in 2019, according to Reuters. Musk is seeking US$150 billion in damages for OpenAI’s charitable arm. The case centers on tension between maintaining nonprofit control and the substantial funding required to develop advanced artificial intelligence systems.

Lawsuit Overview and Damage Claims

Musk’s legal action challenges the structural transformation of OpenAI from a nonprofit organization to a for-profit model. Court filings released before trial confirmed the $150 billion damages claim targeting OpenAI’s charitable arm.

OpenAI’s Defense and Counterarguments

OpenAI has responded by stating that Musk participated in talks regarding the restructuring. The company also notes that Musk founded rival AI startup xAI in 2023, after his involvement with OpenAI. Additionally, OpenAI references a February 2025 letter of intent in which Musk and a group of investors attempted to purchase all of OpenAI’s assets for US$97.375 billion—an offer that, according to OpenAI, contradicts Musk’s claim that OpenAI’s assets must remain in a nonprofit structure and be kept open-source.

Microsoft’s position is that it partnered with OpenAI only after Musk left its board.

xAI and Microsoft Partnership

Musk’s AI startup xAI, founded in 2023, also works with Microsoft. The partnership includes adding xAI’s Grok 4 AI model to Microsoft’s Azure AI Foundry, a platform for building and deploying AI systems.

OpenAI’s Mission Statement Changes

OpenAI has removed the word “safely” and the phrase “unconstrained by a need to generate financial return” from mission language in Internal Revenue Service (IRS) disclosures, along with other edits.

Structural and Business Implications

The lawsuit highlights a fundamental tension in AI development: a nonprofit mission can clash with the enormous funding needed to build advanced AI systems. OpenAI has shifted toward a more commercial model, now operating as a for-profit public benefit corporation—a company structure designed to pursue both profits and a public-interest mission—under the control of a nonprofit foundation. This setup remains under legal and regulatory scrutiny.

The legal and business outcome of this case could shape how later AI companies balance public benefit with investor returns as they develop toward artificial general intelligence (AGI), a term for AI systems with broad human-like capabilities.

OpenAI and Microsoft signed a memorandum of understanding (MoU), a nonbinding agreement outlining planned terms, while working toward a final deal. OpenAI also projected that Microsoft’s revenue share would decline from just under 20% to 8%.