Judge allows Elon Musk's fraud claims against OpenAI to proceed
Racketeering and fiduciary duty allegations tossed, but Musk's core case over OpenAI's shift from nonprofit to for-profit gets a green light.
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A federal judge in California has partially allowed Elon Musk to move forward with his lawsuit against OpenAI, the artificial intelligence company he co-founded, accusing it of abandoning its original nonprofit mission in favour of commercial gain, Bloomberg reported.
On Thursday, US District Judge Yvonne Gonzales Rogers ruled from Oakland that Musk's fraud claims can proceed, potentially opening the door to deeper scrutiny of OpenAI's transition into a for-profit entity.
The judge, however, dismissed several other allegations in Musk's suit, including racketeering, false advertising, and breach of fiduciary duty.
Musk has argued that OpenAI, now closely aligned with Microsoft Corp., and worth billions, strayed from its founding commitment to operate in the public interest. The court also refused to dismiss certain claims against Microsoft, OpenAI's largest financial backer and strategic partner.
The lawsuit comes at a crucial time for OpenAI, as it negotiates restructuring terms with regulators in California and Delaware. The outcome of those talks could determine whether Japanese conglomerate SoftBank continues with its proposed $30 billion investment. If restructuring is not finalized by the end of 2025, the funding could drop to $20 billion, potentially prompting OpenAI to seek alternative investors.
Neither Musk's legal team nor representatives for OpenAI responded to requests for comment on the ruling, the report added.
