The trial that could kill OpenAI

Elon Musk and Sam Altman are fighting in court over OpenAI's shift to a for-profit structure. The case could reshape control of the company and test whether its duty to humanity was enforceable.

In Short

• Musk wants OpenAI restructured, Altman removed and $150 billion damages awarded
• OpenAI says no binding pledge required it to remain non-profit forever
• The company argues outside capital is essential for building AGI

OpenAI CEO Sam Altman believes the world needs more love. But the last few days have made it abundantly clear there is little love lost between him and Elon Musk. The two tech titans are currently embroiled in a fierce courtroom battle of unprecedented proportions. Musk has sued OpenAI and wants Sam Altman gone. Analysts say he may have nothing to lose. OpenAI on the other hand may not have that luxury. The trial could potentially kill OpenAI if the jury rules in favour of Musk.

Musk has alleged that OpenAI abandoned its founding mission of being a non-profit “charity”, restructuring instead into a for-profit under the leadership of Sam Altman. OpenAI’s own charter, which is available in the public domain and serves as its mission statement, states the company’s board – Sam Altman included – has a primary fiduciary duty to humanity, not to its investors or shareholders.

As of October 2025, OpenAI has been split into two entities: a for-profit arm called the OpenAI Group PBC (short for Public Benefit Corporation) and the original non-profit called the OpenAI Foundation. The former being the bone of contention even though the foundation owns majority stake and controls the combined entity. The goal is to build AGI, short for Artificial General Intelligence.

What OpenAI stands to lose

Musk is demanding that OpenAI undo its conversion into a for-profit entity, remove Altman and his board, and pay $150 billion in damages, a sum his lawyers describe as ill-gotten gains the company accumulated during the transition.

OpenAI’s lead counsel William Savitt is countering the lawsuit by arguing that the company never made a binding promise to remain a non-profit indefinitely. According to OpenAI, Musk’s lawsuit is not about ethics – or the lack thereof – but a move motivated by jealousy.

Musk is one of the co-founders of OpenAI. The defense claims Musk only turned litigious after he was pushed out of the board in 2018 following a failed attempt to merge OpenAI with Tesla and assume majority control. As Savitt put it to the jury, when the company refused to be absorbed, Musk simply “picked up his marbles and left.” In 2023, Musk launched his own competing AI company called xAI.

OpenAI says the for-profit pivot was necessary for funding which would otherwise become a huge bottleneck in achieving AGI. Microsoft, Amazon, Alphabet, and Meta – Big Tech companies with big fat wallets – are on track to spend a whopping $635 billion to $700 billion collectively this year on AI. Most of this capital is going into data centres and GPU clusters required to train and host Large Language Models (LLMs) – including OpenAI’s ChatGPT. Evidently, it is a technology shift that cannot be done in isolation.

So fortunately, or unfortunately, OpenAI has found itself in the middle of a trillion-dollar global bet on AI, tied to the industry’s biggest players through complex, multibillion-dollar contracts. The latest mega-investor is Amazon which has committed to spending $50 billion in OpenAI. Nvidia and Softbank are other big contributors.

Despite what might seem like free cash flow, financial pressure inside OpenAI is already mounting. The company recently took a long, hard look at reality and decided to revise its capex target to roughly $600 billion (down from a reported $1.4 trillion previously) by 2030 and chose to move away from doing “side-quests”, instead focusing on core products like Codex amid intensifying competition from Anthropic.

Some of that effort could be cost-cutting, too. OpenAI is currently bleeding billions of dollars every quarter. Internal reports suggest the company missed its user growth and revenue targets for 2025. CFO Sarah Friar has reportedly warned that revenue might not grow fast enough to cover future computing contracts, causing friction with Altman over the timing of a rumoured IPO later this year, though the company has since refuted such reports. A loss in court could shatter investor confidence just as the company seeks more capital. Without said capital, there won’t be any OpenAI.

Musk on shaky ground

During his testimony, Musk revisited the origin story of OpenAI, claiming it was founded to be the opposite of Google. He founded the lab with Altman to create a safer, open-source alternative to Google. Google co-founder Larry Page was apparently on the side of computers and called him a “speciesist” for favouring humanity, Musk claims. Musk said he initially agreed to a small for-profit arm to raise necessary funds, provided it didn't overshadow the mission. However, the $10 billion investment from Microsoft in 2023 changed everything.

OpenAI’s legal team is highlighting Musk’s own financial shortcomings. While he promised to invest up to $1 billion in the early days, he contributed only about $38 million over five years. They also pointed to the timing of the lawsuit, noting that Musk waited until after he launched his own for-profit competitor, xAI, to file his claims. xAI has since been merged with SpaceX which is also IPO-bound in the coming days.

Altman is yet to take the stand but Musk, it is clear, can’t charm his way through the court either. Judge Gonzalez Rogers has expressed a desire to keep the proceedings focused on legal facts rather than Musk’s warnings of an existential threat to humanity. The judge pointedly remarked that many people likely do not want to put the “future of humanity in Mr. Musk’s hands.” Some members of the jury have also expressed deeply negative personal opinions about his character and public persona.

As the trial progresses, cross-examination has sought to undermine Musk’s own credibility. OpenAI’s lawyers played deposition videos that appeared to contradict his courtroom statements regarding whether he had read key company documents. Musk’s frustration grew visible as he was pressed with yes-or-no questions, at one point comparing the tactic to being asked, “Will you stop beating your wife?” arguing that complex corporate histories cannot be reduced to simple binary answers.

All’s fair in war

The conclusion of this trial could redefine the power structure of Silicon Valley. If Musk wins and forces OpenAI to revert to a non-profit or removes its leadership, the ripple effect could be catastrophic for the sector. The biggest fear is that it could burst the so-called AI bubble validating fears that the industry’s astronomical spending will never see a return on investment. Worst case scenario, AGI would be a distant dream. Which begs the question, will the US government even allow it, given OpenAI’s increasing significance in solidifying the West’s tech dominance over China? The answer is no, even if the US government cannot directly overrule a civil court verdict.

As of May 2026, the Pentagon has struck a deal with OpenAI, to integrate its AI technology into classified US military networks. If OpenAI goes down now – which is still a possibility – it would also be seen as a systemic risk to US technological leadership, in which case the Trump administration can and likely will protect the infrastructure which is now powering its AI-first fighting strategy. If it comes to that and the court orders a restructuring, regulators like the FTC or SEC will step in to ensure the compute clusters and weights of the AI models remain intact and under US control. Sam Altman has said that in the future, AI intelligence will be a utility like electricity. It won’t matter where you buy it from as long as you can light up your homes and do all sorts of useful things with it. And so, it is highly likely that he has prepared for both possible outcomes.

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