Elon Musk’s legal team will push forward with its lawsuit against OpenAI. They confirmed the move on Wednesday, a day after the AI firm won state approval for a major corporate change.

Musk’s lawyers argue the deal does not fix the core problem: that OpenAI betrayed its founding mission for profit. Backed by officials in California and Delaware, the new structure makes OpenAI a for-profit company.

However, it is still governed by its nonprofit parent. A jury trial now seems certain to decide the future of one of tech’s most powerful players.

A Hard-Fought Deal Paves the Way for an IPO

After months of intense negotiations, OpenAI has secured the regulatory blessing it needs for a pivotal corporate restructuring.

Attorneys General in both California and Delaware issued statements this week giving the company the go-ahead to transition into a Public Benefit Corporation (PBC). F

inalizing the PBC structure is widely seen as a necessary step to pave the way for a future IPO and raise the massive capital required to fund its operations.

Under the approved framework, the new for-profit PBC will remain under the ultimate control of the original nonprofit, now called the OpenAI Foundation.

Its foundation will appoint the PBC’s board of directors and oversee a powerful safety committee with the authority to halt the release of new AI models.

For stakeholders, the deal creates enormous financial value. Long-time partner Microsoft will hold a 27% stake in the new entity, valued at an estimated $135 billion.

In a move that transforms the nonprofit’s financial power, the OpenAI Foundation will receive a stake worth $130 billion. OpenAI Chairman Bret Taylor previously stated, “this new equity stake would exceed $100 billion—making it one of the most well-resourced philanthropic organizations in the world.”

Deepening the partnership further, the new agreement includes a heavy commitment for OpenAI to purchase $250 billion in Azure cloud capacity from Microsoft over the lifetime of the deal.

The arrangement solidifies Microsoft’s position as the core infrastructure provider for the world’s leading AI company.

‘We Intend to Vindicate Them’: Musk’s Legal Team Presses On

Despite the regulatory green light from two states, Elon Musk’s camp remains undeterred. His legal team quickly signaled that the approvals do nothing to resolve their fundamental claims against the AI company.

According to Musk’s lead attorney, Marc Toberoff:

“The AGs cannot sanitize OpenAI’s unlawful conduct through a hastily arranged deal. The California AG acknowledged this by explicitly carving out our litigation in its Memorandum of Understanding…Our Federal Judge Gonzalez Rogers has repeatedly made clear that a jury – not OpenAI’s executives – should decide whether they and Microsoft can profit from hijacking a charity.

OpenAI’s attempt to preempt that Court and jury through an eleventh-hour restructuring only underscores why this case must proceed to trial.”

For Musk’s legal team, the approval is merely a procedural step that fails to address the core allegation that OpenAI unlawfully abandoned its charitable mission.

They pointed to a key provision in the agreement with California’s Attorney General, which explicitly states the deal “will have no impact on any other case,” effectively carving out an exception for Musk’s ongoing litigation.

Toberoff seized on this detail, welcoming the clarification and adding, “The CA AG preserved Mr. Musk’s rights for good reason—we intend to vindicate them.”

OpenAI, in turn, has dismissed the continued legal threats as more of the same. In a statement to Bloomberg, a company spokesperson said, “This remains a waste of time, as these unserious claims are just further examples of Mr Musk’s ongoing pattern of harassment.”

With such opposing views, it’s clear that while OpenAI’s corporate future is now clearer, its legal battles are far from over.

Just One Front in a Sprawling Legal War

This latest clash is just one front in a sprawling and increasingly bitter war between Musk and the company he co-founded. At the heart of the dispute is the fundamental question of whether OpenAI betrayed its founding principles for profit.

It began when Musk sued OpenAI, alleging it had become a de facto subsidiary of Microsoft.

OpenAI fired back with a countersuit in April 2025, accusing Musk of a “relentless harassment campaign”. OpenAI’s countersuit framed his unsolicited $97.4 billion takeover bid from February as a “fake” disruption tactic rather than a serious offer.

In a public statement, the company claimed, “Elon’s nonstop actions against us are just bad-faith tactics to slow down OpenAI and seize control of the leading AI innovations for his personal benefit.”

Expanding the feud, Musk’s AI startup, xAI, filed a separate lawsuit in September accusing OpenAI of a “strategic campaign” to steal trade secrets by poaching key staff.

OpenAI has since filed a motion to dismiss that suit, calling the claims baseless. In its motion, OpenAI argued that the former employees in question either never joined the company or had deleted the allegedly stolen code before their start date, making misappropriation impossible.

Overseeing much of this conflict is U.S. District Judge Yvonne Gonzalez Rogers, who has shown little patience for the escalating legal tactics. In a July ruling, she chastised both sides for their procedural maneuvering, stating, “the court will not waste precious judicial resources on the parties’ gamesmanship.”

With the judge allowing OpenAI’s harassment counterclaim to proceed, the stage is set for a landmark legal showdown. The jury trial, scheduled for March 16, 2026, will do more than settle a dispute between billionaires.

It will dig into the foundational ethics of AI development, the responsibilities of mission-driven companies, and the line between fierce competition and unlawful harassment. The outcome could set a powerful precedent for governance and accountability across the entire tech industry.