California Rejects Musk’s Lawsuit Support Against OpenAI Over Nonprofit Control

The California attorney general’s office has declined to join Elon Musk’s lawsuit against OpenAI, stating in a letter released Tuesday that the legal action does not serve the state’s public interest. Musk, who co-founded OpenAI in 2015 but later exited, sued the AI company and CEO Sam Altman, alleging the firm has strayed from its nonprofit mission to prioritize profit.

OpenAI plans to shift control away from its nonprofit board in exchange for equity, a move it says is necessary to attract $40 billion in new funding by year-end. Musk contends this transition threatens OpenAI’s founding goal of developing artificial intelligence for humanity’s benefit. He had requested state support to block the move, but the attorney general’s office found insufficient public benefit and suggested Musk may be pursuing personal interests. In February, a Musk-led group made an unsolicited $97 billion offer to take control of OpenAI.

California regulators have authority over the nonprofit’s transition due to OpenAI’s incorporation in the state. Several outside groups, including Meta and philanthropic leaders, have urged the attorney general to block the restructuring.

OpenAI insists its nonprofit arm will retain a valuable stake in the company, enabling it to fund its mission long-term. Musk’s lawsuit is scheduled for a jury trial in spring 2026.

Meanwhile, Musk launched his rival AI firm, xAI, in 2023. Altman has accused Musk of attempting to hinder OpenAI’s progress for competitive advantage. Both OpenAI and Altman deny any wrongdoing.

This high-stakes legal battle between two AI titans could reshape the governance and funding dynamics of one of the world’s most influential artificial intelligence companies.