From a legal standpoint, the battle of the billionaires is now in the hands of the judge and jury.
Regardless of how federal Judge Yvonne Gonzalez Rogers ultimately decides the case Musk filed against Altman, OpenAI and Microsoft, and what penalties she might impose, the Tesla CEO’s attorneys used the trial to question Altman’s trustworthiness and damage OpenAI, the experts said.
Even if Musk loses the trial, “I think he’s still laughing … right now, because he really … buried the hatchet in Altman’s public perception,” said Vince Joralemon, a senior fellow at UC Berkeley’s Center for Law and Technology.
Elon Musk, left, gestures as he walks through a hallway inside the U.S. District Court in Oakland on April 29.
Godofredo A. Vásquez/Associated Press
In the case, which took place in Oakland’s U.S. District Court, Musk accused Altman and Greg Brockman — OpenAI’s CEO and president, respectively — of breaking an agreement they made to keep the company as a nonprofit when he gave them money to launch it.
Musk also charged Altman and Brockman of using the money he gave to enrich themselves when they created a for-profit subsidiary of OpenAI and began to raise massive amounts of money for it.
For its part, OpenAI argued that Musk not only knew about the plan to create a for-profit arm of the artificial-intelligence startup, he took part in the discussions concerning it. Musk ultimately walked away from OpenAI, according to the company, only because Altman and Brockman wouldn’t agree to put him in charge of the for-profit entity or sell OpenAI to Tesla.
After more than two weeks of testimony, lawyers for the two sides began their closing arguments Thursday. The jury, which is playing an advisory role in the case, will begin deliberations next week. At the same time, Rogers will begin the remedy portion of the trial to determine what penalities to impose on Altman, Brockman, OpenAI and Microsoft should Musk prevail.
Once it reaches a decision, the jury will make a recommendation to Rogers on who should prevail on Musk’s claims. She will make the final decision on the verdict and, if necessary, the remedies.
It’s not at all clear how she or the jury will come down on the case, the legal experts said.
Musk’s side effectively portrayed OpenAI CEO Sam Altman as untrustworthy and told a compelling story about how Altman and Brockman betrayed him, the experts said. But Musk had numerous hurdles to overcome in his case, and it’s not obvious that he cleared them, they said.
There are “a lot of major things that would need to all end up coming up in his favor to … get the kind of relief that he’s been asking for,” said Peter Molk, a law professor at the University of Florida.
One big question coming into the trial was whether Musk even had standing in the case — essentially, the right to bring his lawsuit. In general, state attorneys general oversee nonprofits and are the ones who step in to seek remedies when there are alleged misdeeds related to them.
OpenAI tried to get the case thrown out, arguing that Musk lacked standing. Rogers denied that motion, but there’s a chance it could come up again.
It’s unlikely that after having completed the trial Rogers would just dismiss the case on standing grounds at this point, the legal experts said.
“I just would be really surprised if it came down to that,” Joralemon said.
“I feel like that has already been decided, and … if just feels really sloppy if that is the thing that comes down here,” he said.
But the experts said the issue could still play a role in the remedy phase of the trial — at least indirectly. The attorneys general of California and Delaware — who clearly do have standing — signed off on OpenAI’s corporate restructuring. Given that, it’s unlikely that Rogers would undo that transformation if Musk wins the case, they said.
“I’d be surprised if [the standing issue] wasn’t operating in the background as she’s thinking through, ‘what kind of governance changes do I think should be needed here,’” Molk said.
Another big hurdle for Musk is the statute of limitations — the legally imposed deadlines for filing certain types of lawsuits.
Musk had two to three years from becoming aware of the alleged violations to file his case. When exactly that happened was a central issue in the trial, because the Tesla CEO didn’t file his lawsuit until August 2024.
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Musk argued that he didn’t realize that Altman and Brockman were essentially turning OpenAI into a for-profit enterprise with Microsoft’s help until January 2023, when Microsoft invested $10 billion in the AI company. OpenAI, conversely, argued that Musk himself was pushing to turn the company into a for-profit as early as 2017.
The issue of what Musk knew when — and when the timer for filing his lawsuit began ticking down — is likely to be a matter of intense debate by the jury, Joralemon said. And it could be the matter that tips the case in OpenAI’s favor, he said.
That “could be a really boring outcome to this,” Joralemon said.
Musk needed also to show that he had in fact been wronged by Altman and Brockman. But that’s another weak point of his case, the experts said.
His side didn’t present any direct evidence that Altman and Brockman had agreed to keep OpenAI as a nonprofit, Molk said. There was no contract or written agreement that his attorneys could point to, he said.
The best evidence they were able to offer was indirect — most notably, some diary entries from Brockman. In one of those, Brockman suggested that if they were to convert OpenAI into a for-profit corporation after telling Musk they were committed to the nonprofit, it would be a “lie.” Brockman also wrote that it would be “morally bankrupt” to convert the company without Musk and would represent them stealing the nonprofit.
OpenAI president Greg Brockman, left, leaves the U.S. District Court in Oakland on April 29.
Godofredo A. Vásquez/Associated Press
That evidence was helpful for Musk, but not definitive, Molk said. And much of his case involved not showing that Altman and Brockman had wronged him but that they were untrustworthy and had made a lot of money running OpenAI, he said.
That might have been the best they could do, given what they had to work with, he said.
“If you don’t really have direct promises from anyone at OpenAI saying, ‘We promise to remain a nonprofit without any for-profit operating piece for X number of years’ — if you don’t have that then, you don’t want to just do nothing with your time,” Molk said.
Musk tried to argue that he was duped by Altman and Brockman into funding a nonprofit that they intended to convert into a for-profit enterprise. But it’s hard to believe that, said Deven Desai, a professor of business law and ethics at the Georgia Institute of Technology business school. The evidence OpenAI presented that Musk was involved in discussions about turning the company into a for-profit and wanted to lead it undermines that position, he said.
If that evidence holds up “in the jury’s mind, I don’t know that they’ll believe that there’s this grand scheme to rob him of this nonprofit,” Desai said.
All that said, Musk’s side did do an effective job of undermining the credibility of Altman and Brockman and sullying their characters, the experts said. Brockman’s diary entries felt like “a smoking gun,” Joralemon said. If the case comes down to who they think is more believable, that could weigh in Musk’s favor, they said.
OpenAI CEO Sam Altman, right, and company president Greg Brockman, center, arrive at the U.S. District Court in Oakland on April 30.
Godofredo A. Vásquez/Associated Press
Meanwhile, Musk’s attorneys showed that he donated money and didn’t get anything in return, while insiders, including Brockman in particular, made lots of money, Joraelmon said.
“That’s just a clear narrative, and his side, I think, made that well,” he said.
Even if the case goes against Musk anyway, he gained by tarnishing Altman and OpenAI, the experts said.
That’s certainly “not something that OpenAI wants to see for their CEO,” Desai said.
The trial is also coming as OpenAI is widely reported to be gearing up for an initial public offering. If Musk wins and Rogers imposes significant governance reforms on the company, its offering could be derailed. But even if OpenAI wins, it’s likely going to have to mention the the case as a risk factor in its IPO documents because of the danger that Musk could appeal and get a different outcome.
And that risk could drop the value of OpenAI in the offering or the amount it raises, Joralemon said.
“It will be a dark cloud hanging over them,” he said.
If you have a tip about tech, startups or the venture industry, contact Troy Wolverton at twolverton@sfexaminer.com or via text or Signal at (415) 515-5594.