The Real Losers of the Musk v. Altman Trial

At a glance:

• The Musk v. Altman trial over OpenAI's nonprofit mission reached closing arguments, with a verdict expected as soon as next week — but regardless of who wins, employees, policymakers, and the public who believed in OpenAI's charitable mission stand to lose.
• Evidence at trial revealed that OpenAI's cofounders, including Elon Musk himself, gradually treated the nonprofit structure as an obstacle, pursuing a for-profit pivot that created an $850 billion company while sidelining the original mission to ensure AGI benefits humanity.
• The case has exposed deep tensions between OpenAI's nonprofit governance and its commercial ambitions, with former researchers, public-interest advocates, and legal scholars warning that neither Musk nor Altman has meaningfully protected the public interest.

A verdict that changes nothing for the public

Attorneys delivered closing arguments in the Musk v. Altman trial on Thursday, each side making a final push to convince a judge and jury that their client — Elon Musk or Sam Altman — is the more well-intentioned steward of OpenAI's founding nonprofit mission. A verdict could arrive as soon as next week, concluding a decade-long legal battle between two of the technology industry's most influential figures. But legal analysts and observers say the real losers have already been determined: the employees, policymakers, and members of the public who believed in the mission of a nonprofit research lab and supported OpenAI because of it.

What took precedence for Musk and OpenAI's other cofounders at nearly every turn was building the world's leading AI lab — even if that meant creating a multibillion-dollar for-profit company in the process. "It's hard to see how the public interest is being protected by either of these parties, and that is really what is ultimately at stake in a case about a nonprofit," said Jill Horwitz, a Northwestern University law professor with expertise in nonprofits and innovation, who listened to the closing arguments. "The public interest in the nonprofit is at risk no matter who wins."

The mission nobody truly controls

OpenAI's stated mission is to ensure that artificial general intelligence (AGI) benefits humanity — but humanity is not a party in this case. In practice, OpenAI has spent the last decade attempting to rival multitrillion-dollar companies like Google and build AGI first. Additionally, Musk and Altman have fought tooth and nail over who gets to control OpenAI. "Musk and Altman are basically locked in a race to be the first to build superintelligence, and they both rightly fear what the other will do if they win. The rest of us should fear them both," said Daniel Kokotajlo, a former OpenAI researcher who joined in 2022 and has raised concerns over the company's safety culture. Kokotajlo was part of a group of former OpenAI researchers that filed an amicus brief in the case against OpenAI's for-profit conversion, arguing that the nonprofit structure was critical in their decision to join the company.

At trial, OpenAI's nonprofit arm was discussed as if it were yet another corporate investor. OpenAI's lawyers argued that giving the nonprofit a $200 billion stake in the for-profit company is proof that OpenAI is fulfilling its mission. Public advocacy groups, however, disagree that funding alone is sufficient. "I am among the many people who are glad to see how many philanthropic resources the OpenAI foundation has at its disposal to do good work," said Nathan Calvin, VP of state affairs for the AI safety nonprofit Encode, which filed an amicus brief opposing OpenAI's restructuring earlier in the case. "But it's worth remembering that the nonprofit also has a governance role, and that the mission of the nonprofit is not that of a typical foundation — it is specifically to ensure that AGI benefits all of humanity. Money is important for that goal, and is useful all else equal, but it is not the goal in and of itself."

From a May 2015 email to an $850 billion company

Evidence revealed during the trial suggests Altman and Musk were initially in agreement about OpenAI launching as a nonprofit and operating much like a typical startup. They shared the goal of beating Google DeepMind in the race to AGI. But creating OpenAI as a nonprofit turned out to be a deeply inconvenient vehicle for winning that race. In one of the first emails Altman sent to Musk about setting up "some sort of nonprofit" that ultimately became OpenAI, written in May 2015, he stated that the people working on it would receive "startup-like compensation." Musk replied that it was "worth a conversation."

Virtually nothing presented at trial explained what the business partners planned to do if the nonprofit ended up with more money than it needed. There were some discussions about open-sourcing the technology, but OpenAI's lawyers argued there was never any binding agreement about doing so. In practice, the focus appeared to be on acquiring expensive servers to generate more powerful AI models, albeit with significant research into developing safeguards around them. Musk has accused Altman and Greg Brockman, OpenAI's cofounder and president, of straying from the nonprofit's founding mission. He claims the founders used his $38 million investment to turn OpenAI into an $850 billion company and make several of its cofounders billionaires.

Internal doubts and a crumbling structure

Throughout OpenAI's history, the nonprofit structure was apparently seen as a roadblock to building the company into a massive business. In December 2016, Musk wrote an email to OpenAI's cofounders saying that setting up OpenAI "as a non-profit might, in hindsight, have been the wrong move," adding that the "sense of urgency is not as high." The following year, Musk and the cofounders attempted to create a for-profit arm and even considered scrapping the nonprofit entirely. However, those talks broke down after Musk requested control of the company and Brockman and Sutskever asked for large equity stakes. Around this time, Brockman wrote in his diary about how OpenAI could make him a billionaire.

Shortly after those failed negotiations, in February 2018, Musk suggested folding OpenAI into Tesla — his for-profit car company — and even tried to recruit Altman to run the AI unit, offering him a Tesla board seat as an incentive. Shivon Zilis, Musk's deputy and the mother of four of his children, wrote in text messages at the time that Altman and Brockman had not "internalized the advantages of burying this in Tesla for stealth advantage." In an FAQ Zilis wrote for the proposed Tesla AI group, she said its strategy had not been determined but that it "may be deeply proprietary." Kevin Scott, Microsoft's chief technology officer, questioned around that time whether early OpenAI donors such as tech investor Reid Hoffman were aware that OpenAI was essentially becoming a for-profit company. "I can't imagine that they funded an open effort to concentrate [machine learning] talent so that they could then go build a closed, for-profit thing on its back," Scott wrote in an email to his boss. Hoffman relayed that he didn't mind, and Microsoft later agreed to deepen its financial and technical support of OpenAI after it launched a for-profit arm.

The 2023 ouster and its trial echoes

During OpenAI's brief ouster of Altman in November 2023 — a saga already rehashed extensively throughout this trial — text messages show that Altman and Microsoft CEO Satya Nadella hand-picked new nonprofit board members. Altman presented these candidates to the old board members, who had fired him, as conditions under which he would return to the company. "I was willing to run back into a burning building," Altman said. William Savitt, an attorney for OpenAI, emphasized on Thursday that no other AI company in the world sits under a nonprofit. "OpenAI remains a charity … more stronger and more powerful than ever," Savitt argued.

Mounting legal and ethical pressure

Despite OpenAI's unique structure, it is plagued by many of the same pitfalls as any tech giant. In several lawsuits from ChatGPT users and their families, OpenAI has been accused of negligence and wrongful death for allegedly contributing to a suicide, a drug overdose, a mass shooting, and other deadly incidents. Last month, OpenAI supported an Illinois bill that would help AI labs dodge liability if their models contribute to societal disasters — a rival, Anthropic, opposed the legislation. Media companies have sued OpenAI for copyright infringement. Current and former employees allege that OpenAI's economic research unit has morphed into an advocacy arm for the company.

OpenAI has defended its work, launching new initiatives to address AI's societal impacts and introducing safeguards to mitigate the dangers of AI models. Google DeepMind, Meta, and other competitors face many of the same allegations. In fact, OpenAI is increasingly indistinguishable from those profitable, publicly traded companies as it continues to pursue ever-loftier valuations. The nonprofit once burnished OpenAI's public image, but the Musk v. Altman trial appears to have removed all but the last of the shine.

What to watch next

With a verdict potentially days away, the immediate question is whether the court will force OpenAI to revert to its nonprofit origins or validate the for-profit structure that has defined the company for years. But the broader implications extend well beyond one boardroom. The trial has laid bare a fundamental tension in the AI industry: can a company built on an altruistic mission scale into a commercial powerhouse without betraying the public trust that got it started? Whichever way the judge rules, the answer to that question will reverberate across every AI lab navigating the same nonprofit-to-profit pipeline — and across every regulatory body trying to keep pace.

This is an edition of Maxwell Zeff's Model Behavior newsletter. Read previous newsletters here.