A U.S. court has rejected Elon Musk’s bid to prevent OpenAI from restructuring as a for-profit entity, ruling that there were no legal grounds to block the transition.
The decision, detailed by Bloomberg, allows OpenAI to proceed with its shift to a public benefit corporation (PBC), a move the company announced in December 2024.
The ruling follows months of legal disputes between Musk and OpenAI leadership. In addition, he recently attempted a $97.4 billion takeover of the company, which OpenAI’s board swiftly rejected.
OpenAI’s Transition and Musk’s Opposition
Musk has criticized OpenAI’s transition to a for-profit model, arguing that it contradicts the company’s original nonprofit mission.
However, OpenAI’s leadership has maintained that shifting to a PBC was necessary to secure funding for large-scale AI development, arguing it ensured continued advanced AI research while balancing commercial interests with public benefit.
A public benefit corporation is distinct from a traditional for-profit business in that it is legally required to prioritize a broader public mission alongside financial returns.
OpenAI’s leadership has argued that this structure enables the company to attract the funding necessary for AI innovation while maintaining ethical oversight through its nonprofit board.
Despite these assurances, Musk has continued to push back, claiming that OpenAI’s increasing reliance on corporate investors has compromised its independence.
His lawsuit against OpenAI accused the company of abandoning its founding principles and aligning too closely with corporate interests, particularly those of Microsoft.
Following Musk’s failed takeover attempt, OpenAI’s board reportedly discussed implementing governance changes to prevent similar acquisition attempts in the future.
The discussions underscored concerns that OpenAI’s leadership was actively working to maintain control amid increasing financial influence from outside investors.
SoftBank’s $40 Billion Investment and OpenAI’s Expanding Financial Network
As OpenAI moves forward with its for-profit restructuring, its financial landscape has shifted significantly.
In February 2025, SoftBank invested $40 billion in the company, marking a major shift in its funding strategy. This investment is expected to accelerate OpenAI’s development of AI-specific supercomputing infrastructure, particularly through the Stargate Project, a government backed initiative aimed at expanding AI computational capabilities with support from private-sector and government-backed investments.
Despite the influx of new capital, Microsoft remains a central player in OpenAI’s ecosystem. The company has maintained an exclusive partnership with OpenAI since 2019, providing billions in cloud computing and AI infrastructure support.
OpenAI and Microsoft recently linked their artificial general intelligence (AGI) ambitions to a $100 billion revenue target. This level of financial commitment has intensified concerns over how OpenAI balances its obligations as a public benefit corporation with the commercial interests of its largest investors.
The Expanding AI Competition: xAI and Anthropic
While OpenAI secures large-scale funding, competition in the AI industry has grown stronger.
Musk’s AI startup, xAI, has positioned itself as a direct challenger, claiming to offer an alternative to OpenAI’s closed-source approach.
xAI recently introduced Grok 3, a model that surpasses OpenAI’s best models in multiple benchmarks. While Grok 3’s performance gains remain subject to further independent evaluation, the announcement highlights xAI’s ambition to compete directly in the AI space.
Meanwhile, Anthropic, founded by former OpenAI researchers, continues to refine its own AI models, presenting additional competition. The company recently introduced Claude 3.7 Sonnet, a major update to its AI model lineup that combines rapid response generation with advanced reasoning capabilities.
Anthropic’s approach with Claude 3.7 Sonnet places it in direct competition with OpenAI’s o3-mini, Google Gemini 2.0, and xAI’s Grok-3. The model demonstrates clear leadership in coding-related tasks, outperforming OpenAI’s models and DeepSeek R1 in agentic coding (SWE-bench Verified) and agentic tool use (TAU-bench).
As OpenAI scales up its operations, the question remains whether it can maintain its position at the forefront of AI research while navigating increasing pressure from rivals, growing investor influence, and the ongoing legal battle with Musk.
While the court ruling allows OpenAI to continue its restructuring, Musk’s broader lawsuit against the company remains unresolved, meaning further legal challenges could arise in the near future.
