Musk Could Lose in Court and Still Get What He Wants From OpenAI
Elon Musk is asking a court to unwind OpenAI's for-profit transformation and hand the OpenAI Foundation a bigger stake. Legal scholars say he will probably lose that argument. But the lawsuit might accomplish the same thing regardless.
The real mechanism is not the courtroom. It is the attorney general's office. California Attorney General Rob Bonta approved OpenAI's transition to a public benefit corporation — a hybrid entity structured to serve both shareholders and a public good, with legal obligations to both — last October, and a coalition of over 60 civil society organizations is now asking him to reopen that deal. Their evidence includes documents that only became public because of Musk's litigation: diary entries from OpenAI president Greg Brockman, unsealed as trial evidence, showing he privately wrestled with whether to "steal the non-profit" even as he helped build it.
"Can't see us turning this into a for-profit without a very nasty fight," Brockman wrote in November 2015, according to Vox, which reported on the unsealed entries. Months earlier he had asked himself, in his own handwriting: "Financially, what will take me to $1B?" The answer, years later, was a restructuring that made Brockman one of the richest people alive — with a stake now estimated at roughly $30 billion on paper, per Yahoo Finance.
The coalition making the regulatory push is called EyesOnOpenAI. It sent a letter to Bonta on May 6 urging the AG to revisit the October 2025 restructuring approval before it becomes effectively irreversible, a person familiar with the matter confirmed to type0. The letter cites trial evidence including the Brockman diary excerpts and details of corporate relationships not available when Bonta struck his original deal with OpenAI. Bonta's office had said it conducted a robust investigation over 18 months before entering into a final MOU with OpenAI last October, securing concessions meant to ensure charitable assets were used for their intended purpose.
"I would be surprised if the AG knew the extent to which OpenAI never did a valuation of the OpenAI foundation worth," said Catherine Bracy, CEO of TechEquity and a co-leader of the EyesOnOpenAI coalition, speaking to Vox. "I would be surprised if he knew the extent to which the conflicts of interest were embedded up and down the company."
The restructuring Bonta approved that October gave OpenAI's nonprofit foundation a 26 percent equity stake in the newly formed corporation, then worth roughly $130 billion and now estimated at around $200 billion — a figure that reflects the kind of valuation the foundation received, Forbes reported, when the AG signed off. That stake sits inside a foundation whose board of directors overlaps almost entirely with the for-profit entity's board, with Microsoft CEO Satya Nadella having at least partially orchestrated those appointments, according to court documents cited in the coalition's letter.
The stakes are high for both sides. Musk is demanding restitution (estimates vary across news reports — The Guardian reported approximately $134 billion while Vox reports $150 billion; the exact figure depends on how restitution is calculated), court orders removing Sam Altman from power, and a full unwinding of the for-profit restructuring — remedies that legal scholars describe as extraordinary and unlikely to survive judicial review. "A win on these grounds would be disruptive in a way that courts are hesitant to be disruptive," said Samuel D. Brunson, a nonprofit legal scholar at Loyola University Chicago School of Law, speaking to Vox.
But Brunson thinks the regulatory route is a different matter. "I would be pretty comfortable betting on Musk losing in court," he said. "But I would be more comfortable betting on the attorneys general revisiting their agreements with OpenAI." If the trial record shows the foundation's stake was undervalued at the time of the deal — because Brockman and Altman held interests the AG's office did not fully account for — Bonta has grounds to renegotiate.
What makes this case worth watching beyond the immediate parties is the precedent it may set. Litigation discovery has functioned as a competitive tool in other industries. Tobacco companies used product-liability discovery to expose rival marketing practices; pharmaceutical firms have used patent litigation to map competitors' manufacturing processes; tech antitrust actions have produced internal email trails that reshaped entire regulatory debates. In each case, the lawsuit was not only about winning in court — it was about using the discovery process to extract information that could then be deployed against the opponent through other channels: regulators, competitors, Congress, or the press. The pattern has a name in legal circles — "sue to discover" — and the Musk trial is now the first high-profile instance in the AI era where the strategy is being used at scale against a frontier lab.
Whether it becomes a replicable playbook is the more contested question. Brunson cautions that most companies lack Musk's resources and incentives: the lawsuit costs tens of millions of dollars, takes years to produce results, and only matters if the target has a regulatory approval that can be revisited — a narrow set of conditions. "It's not a strategy most competitors could deploy even if they wanted to," he said. "But the conditions here are more common in AI than in other sectors, because so many labs are still navigating nonprofit-to-profit transitions with government oversight." If Bonta reopens the OpenAI deal, other labs with similar restructuring histories — or state attorneys general watching the outcome — may treat that as a green light to investigate.
OpenAI's position at trial has been that the lawsuit is not about principle but envy. The company has argued that Musk is using the legal system to damage a rival as his own AI venture, xAI, competes for the same capital and talent. Musk has said he would donate any damages to the OpenAI Foundation, which is already one of the world's wealthiest charities. His stated goal, rebuilding OpenAI around its nonprofit mission, is one both sides of the EyesOnOpenAI coalition might share. Where they diverge is on who gets credit for the win.
"In an ideal world, the plaintiff in this case would be the people of California," Bracy said, "rather than one billionaire who decided to pick his petty beef with this other billionaire he doesn't like."
OpenAI declined to comment on the EyesOnOpenAI letter.
What to watch next: whether Bonta's office responds to the EyesOnOpenAI letter and whether it initiates any new inquiry into the restructuring terms. The AG is currently campaigning for reelection. OpenAI is reportedly targeting an IPO as early as this year. The clock on any regulatory intervention runs alongside both of those timelines.