Jury selection begins Monday in Oakland federal court — where two billionaires will spend the week hashing out in private what the public has no formal say over: who governs the most transformative technology of our era. But OpenAI moved first. Eighteen days ago, OpenAI sent letters to the California and Delaware attorneys general presenting evidence of what it called improper and anti-competitive conduct by Elon Musk and his associates, and asking the states to open a formal investigation — a regulatory counteroffensive running alongside the trial, before a jury has been empaneled.
Musk invested roughly $38 million, about 60 percent of OpenAI's early funding, based on written assurances the organization would stay nonprofit, Reuters reported. After OpenAI restructured last October — with Microsoft holding a roughly 27 percent stake worth about $135 billion — his side argues that promise was broken. His attorneys are seeking $134 billion in damages and the removal of Altman and Brockman from their executive roles, CNBC reported. The damages figure drew skepticism from the bench. U.S. District Judge Yvonne Gonzalez Rogers called it a number "pulled from the air," Reuters reported.
Musk's own legal team flagged a potential complication: the statute of limitations on the fraud claim may have run before the lawsuit was filed, Reuters reported. Whether that defense sinks the fraud count before the jury hears it is separate from whether the nonprofit promise was ever kept.
Altman's counter is that the nonprofit structure never functioned the way Musk describes, and the lawsuit is designed to slow a market leader. The AG complaints are the counteroffensive: if either attorney general opens a formal investigation, state regulators gain independent authority over nonprofit structures that a courtroom verdict cannot replicate. What a jury decides in Oakland resolves the question for one company. What state regulators decide could set precedent for every startup that ever stacked a commercial entity on a nonprofit foundation.
What to watch: whether either AG office moves toward a formal investigation before Monday, and whether settlement talks accelerate — which would preserve the current structure but leave the governance question permanently unresolved.