Elon Musk lost his latest attempt to pause OpenAI’s planned restructuring, but the legal fight over the company’s future is not over. A federal judge denied Musk’s request for a preliminary injunction while signaling that the dispute around OpenAI’s for-profit conversion still raises serious questions.
The ruling gives both sides something to work with
Musk’s lawsuit names OpenAI, Microsoft and OpenAI CEO Sam Altman as defendants. The case argues that OpenAI has moved away from its nonprofit mission to ensure its AI research benefits all humanity.
OpenAI was founded as a nonprofit in 2015. In 2019, it shifted to a “capped-profit” structure. The company is now seeking another restructuring, this time into a public benefit corporation.
Musk asked the court to halt that transition with a preliminary injunction. On Tuesday, U.S. District Court Judge Yvonne Gonzalez Rogers, in Northern California, denied the request.
That denial is a clear procedural win for OpenAI. But the ruling also included language that may give Musk and other critics of the restructuring a path to continue pressing the issue.
Why the judge’s concerns matter
Judge Rogers said that “significant and irreparable harm is incurred” when public money is used to fund a nonprofit’s conversion into a for-profit. That point goes to the center of the dispute: whether OpenAI’s structure can change without undermining the public-interest commitments associated with its nonprofit origins.
OpenAI’s nonprofit currently holds a majority stake in OpenAI’s for-profit operations. According to the source article, it reportedly stands to receive billions of dollars in compensation as part of the transition.
The judge also noted that several OpenAI co-founders, including Altman and president Greg Brockman, made “foundational commitments” not to use OpenAI “as a vehicle to enrich themselves.” Those comments do not decide the case, but they show the court is looking closely at the relationship between OpenAI’s founding commitments and its planned corporate future.
Judge Rogers said the Court is prepared to offer an expedited trial in the fall of 2025 to resolve disputes over the corporate restructuring. Marc Toberoff, a lawyer representing Musk, told TechCrunch that Musk’s legal team is pleased with the decision and plans to accept that offer. OpenAI has not said whether it will accept, and did not immediately respond to TechCrunch’s request for comment.
OpenAI avoided an immediate block
The ruling also contained important wins for OpenAI. Judge Rogers found that the evidence Musk’s legal team presented was “insufficient for purposes of the high burden required for a preliminary injunction.”
That evidence concerned Musk’s claim that OpenAI breached a contract by accepting around $44 million in donations from him and then taking steps toward a for-profit conversion. The judge also pointed to emails submitted as exhibits that showed Musk himself considering that OpenAI might someday become a for-profit company.
xAI, Musk’s AI company and a plaintiff in the case, also failed to show that it would suffer “irreparable harm” if the conversion were not blocked. Judge Rogers was not persuaded by the plaintiffs’ arguments involving Microsoft and interlocking directorate laws. She was also not persuaded that Musk has standing under a California provision prohibiting self-dealing.
In practical terms, OpenAI can continue pushing forward for now. But the judge’s refusal to stop the restructuring immediately does not remove the larger questions around nonprofit control, compensation and governance.
Regulators and AI safety advocates are watching
The ruling may add pressure beyond the courtroom. Tyler Whitmer, a lawyer representing Encode, told TechCrunch that the decision places a “cloud” of regulatory uncertainty over OpenAI’s board of directors.
Encode, a nonprofit, filed an amicus brief arguing that OpenAI’s for-profit conversion could jeopardize AI safety. Attorneys general in California and Delaware are already investigating the transition, and Whitmer said the concerns raised by Judge Rogers could encourage them to probe more aggressively.
At least one former OpenAI employee also expressed concern about what the restructuring could mean for AI governance. Speaking to TechCrunch on the condition of anonymity to protect future job prospects, the former employee said they believe the conversion could threaten public safety.
The former employee said OpenAI’s nonprofit structure was meant, in part, to help ensure that profit motives do not override its mission of ensuring AI research benefits all of humanity. They also said that the nonprofit structure was one of the main reasons they joined the organization.
The next deadline carries high stakes
Musk was once a key supporter of OpenAI. He is now one of its most prominent adversaries. His company xAI competes directly with OpenAI in developing frontier AI models, while Musk and Altman are also competing for legal and political power under a new presidential administration.
For OpenAI, the stakes are high. The company reportedly needs to complete its for-profit conversion by 2026, or some of the capital it recently raised could convert to debt.
The immediate result is a mixed picture. OpenAI avoided a preliminary injunction, but the court’s concerns, the possible expedited trial in the fall of 2025, ongoing regulatory attention and AI safety objections mean the restructuring remains contested.
The next few months should make clearer how many legal and governance hurdles OpenAI still faces before it can complete its transition.