Elon Musk sued OpenAI and lost. But the core question of the case remains unanswered

Alexandra Andhov, University of Auckland, Waipapa Taumata Rau and Ian Murray, The University of Western Australia

May 19, 2026

On Monday, a nine-member federal jury in Oakland, California took less than two hours to dismiss Elon Musk’s lawsuit against OpenAI and its chief executive Sam Altman.

Crucially, the jury did not rule on the core claims of the case. These included whether OpenAI, the company behind the popular artificial intelligence (AI) chatbot ChatGPT, strayed from its founding mission and whether Altman and OpenAI’s co-founder Greg Brockman enriched themselves at the expense of a charitable purpose.

It decided only that Musk had waited too long to sue in relation to his core claims about breaches of a founding contract or breach of charitable trust.

A victory for Musk could have neutered OpenAI, which in turn would have probably sent shockwaves through the entire AI sector given the company’s dominant position developing the technology.

Now, however, OpenAI has a clear path to take its next big step in the AI race, even though the key question at the core of the case remains unanswered: is OpenAI a nonprofit dedicated to humanity or a corporation dedicated to its shareholders?

How it all started

OpenAI was founded in December 2015 as a nonprofit entity – an AI research lab.

Musk and a group of prominent entrepreneurs pledged US$1 billion to develop AI for the benefit of humanity, free of commercial pressure. Alongside Musk, the founding group included Altman, Brockman and computer scientist Ilya Sutskever.

The organisation’s charter committed to two key principles. First, developing artificial general intelligence safely and for the benefit of all of humanity.

Second, developing the technology openly, meaning it would be open source. This would allow others to use their underlying models, code, and research freely.

This was the deal Musk says he signed up for. And OpenAI claims it continues to honour this deal even today, despite more than US$20 billion in revenue in 2025.

Since 2015, a lot has happened. And understanding these events is key to interpreting the jury’s verdict.

A very different deal

By 2019, the original deal looked different. Given that training frontier AI models was extraordinarily expensive, Altman started to seek more cash.

OpenAI created a capped-profit subsidiary where investors could earn up to 100 times their initial investment, with any extra money flowing back to the nonprofit parent.

One of the first investors was Microsoft, which initially invested US$1 billion and more than US$13 billion over time. The nonprofit retained formal governance, the usual nonprofit rules applied, but the commercial subsidiary became the decision-maker.

That same year, OpenAI released GPT-2. The model was released partially, in stages, rather than published as open source. This was the moment the “open” in OpenAI began to read differently.

GPT-3 followed in 2020, and it was available only via a paid subscription. The inner workings of the model also remained secret. ChatGPT launched in November 2022, and reached 100 million users in a few days.

Twelve months later, OpenAI’s nonprofit board fired Sam Altman, citing a loss of confidence in his candour. This was what the governance structure was meant for: to protect the organisation’s humanity-first mission, the board had the power to remove the chief executive.

Yet, within five days, after pressure from Microsoft and the employees, Altman was back and the board was out. A new board that aligned with the commercially-driven enterprise took their seats.

The mechanism built to keep OpenAI accountable to its charter was the one that lost. Whatever the “humanity claim” of the founding mission was supposed to mean, commercial interests prevailed.

A sweeping reorganisation

In October 2025, after nearly a year of negotiation with the attorneys general of California (where OpenAI is headquartered) and Delaware (where it is incorporated), the organisation completed a sweeping reorganisation.

The nonprofit became the OpenAI Foundation, with the same mission: “to ensure artificial general intelligence benefits all of humanity”. The for-profit became a public benefit corporation, called OpenAI Group PBC. Unlike a conventional corporation, it is required to advance its stated mission and consider the broader interests of all stakeholders.

The OpenAI Foundation holds a 26% stake in the new public benefit corporation and retains some contractual and special shareholder governance rights. Microsoft owns 27% and the remaining 47% is owned by other investors and employees.

Thus the Foundation controls the public benefit corporation in form. Yet in practice, OpenAI is now a profit-seeking enterprise with a charitable shareholder. So while a number of nonprofit governance guardrails are in place, significant deficiencies remain.

The unanswered question

OpenAI is now openly preparing for a public listing at the end of 2026, at an expected valuation at up to US$1 trillion, even as it defends dozens of pending lawsuits, ranging from intellectual property infringement and consumer protection claims to a wrongful death suit.

This is the part the jury did not address.

A verdict on a statute of limitations is a statement about timing, not purpose. It tells us when a complaint can be heard. It does not tell us whether the complaint was right. And in this particular case, it demonstrates the difficulty in relying on private individuals to enforce non-profit governance norms.

Musk has said he will appeal the verdict. The appeal court will almost certainly limit itself to a narrow legal question – perhaps when a reasonable plaintiff should have understood OpenAI had changed.

The larger question about whether OpenAI is a nonprofit dedicated to humanity or a corporation dedicated to its shareholders, has now been deferred indefinitely – at least in a legal context.

The public, however, will no doubt make up its own mind about a company now worth hundreds of billions of dollars.

Alexandra Andhov, Chair in Law and Technology, University of Auckland, Waipapa Taumata Rau and Ian Murray, Associate Professor, Law School, The University of Western Australia

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This article is republished from The Conversation under a Creative Commons license. Read the original article.