SpaceX CEO Elon Musk and his rival Sam Altman have both testified at the OpenAI trial, as both companies prepare for massive IPOs amid questions about revenue and earnings.
Oh yea, Musk is also the CEO of Tesla, which is facing its own share of scrutiny about an inflated stock price.
Meanwhile, Microsoft is trying to quietly walk away from OpenAI after years of partnership, but that won’t keep MSFT CEO Satya Nadella off the witness stand at the OpenAI trial.
OpenAI Trial? Why?
The Wall Street Journal has a serviceable intro to the trial which it characterizes as “a landmark trial that could potentially upend OpenAI’s future”:
Musk has accused OpenAI and Altman, its CEO, of manipulating him into thinking he was donating tens of millions of dollars to help launch a nonprofit to develop artificial intelligence for the benefit of humanity, only to turn it into a for-profit venture.
OpenAI has said that Musk not only knew about the plan to create a for-profit structure, but that he supported it and requested unilateral control of the venture. The OpenAI founders said no to his request, leading Musk to start his own AI company and now sue as a “broader strategy of harassment aimed at slowing us down,” the company has alleged.
The remedies that Musk is asking for include the removal of Altman and OpenAI President Greg Brockman from their leadership roles at the AI company, damages worth more than $180 billion to be paid from OpenAI’s for-profit arm to its nonprofit parent, and unwinding the company’s recent conversion to a more traditional governance structure.
Bloomberg Law covered the Judge’s decision to let the OpenAI trial proceed in January:
She wrote that while the evidence is unclear, Musk claims that his contributions to OpenAI “had a specific charitable purpose and that he attached two fundamental terms to it: that OpenAI be open source and that it would remain a nonprofit — purposes consistent with OpenAI’s charter and mission.”
Rejecting an argument by OpenAI, the judge found that Musk’s use of an intermediary to donate $38 million in seed money to the startup doesn’t strip him of legal standing to try to enforce those conditions.
“Holding otherwise would significantly reduce the enforcement of a large swath of charitable trusts, contrary to the modern trend,” she wrote.
The judge also refused to toss out Musk’s fraud allegations, pointing to internal communications involving OpenAI co-founder Greg Brockman in 2017. In an email that September that was cited by the judge, fellow board member Shivon Zilis told Musk that Brockman would “like to continue with the non-profit structure” of OpenAI.
According to the ruling, two months later, in a private note, Brockman wrote: “cannot say that we are committed to the non-profit. don’t want to say that we’re committed. if three months later we’re doing b-corp then it was a lie.”
Marc Toberoff, a lawyer for Musk, said in an email that the ruling confirms “there is substantial evidence that OpenAI’s leadership made knowingly false assurances to Mr. Musk about its charitable mission that they never honored in favor of their personal self-enrichment.”
So what’s at stake in the OpenAI trial?
Petty and Personal, Nothing More?
The Guardian’s Blake Montgomery set the stakes for the OpenAI trial:
The case, which pits the world’s richest man against the creator of the world’s most famous chatbot, in theory could pose consequential questions: what incentives should AI be oriented towards, benefiting humanity or making money? What does a responsible, maximally beneficial version of AI technology look like? What happened to OpenAI’s stated mission of benefiting humanity?
But the case is not posing that question. Instead, it’s a fight dominated by personal pettiness and specific bitterness, motivated by money and personal grievance.
Musk is no messenger for AI safety. His company’s chatbot Grok was the centerpiece of one of the most disturbing failures of generative AI to date: thousands of people used it to undress real women and underage girls via X, the social network Musk owns. xAI, the artificial intelligence arm of SpaceX as of February, has also been accused of negligently polluting its surrounding community with giant datacenters. Why should we believe he would reorient OpenAI towards humanity’s collective benefit? He doesn’t lead xAI that way.
If Musk wins, he will kneecap a rival AI company. Without its for-profit arm, OpenAI will face difficulty attracting the level of investment it needs to compete in the AI race. If Altman and Brockman win, they can move forward with his for-profit enterprise as before. As Brockman wrote in his diary in 2017, which was made public during discovery: “It would be nice to be making the billions.” Perhaps his wish will be granted after the trial, and he will have pulled off a feat of corporate subterfuge that has made him and Altman billionaires. Neither that outcome nor Musk’s victory seems promising for an AI industry aligned less with monetary incentives and more with humanity’s collective betterment.
Ruben Steiger has a wider view:
The founding mission of OpenAI was to “advance digital intelligence to benefit humanity, specifically unconstrained by a need to generate financial return.” Early work on the venture was obsessed with safety and guardrails to protect the species from what its developers considered the most important technology since controlled fire — one with no less potential for disaster if left unconstrained, they were at pains to convince us. Along with a large contingent of leading researchers, they concluded that AGI was inevitable and thus creating it in a responsible manner was a heroic task.
Yet their mission statement has changed six times since then and now promises to ensure that “Artificial General Intelligence benefits all humanity.” How far they’ve come. Safety is guaranteed through vague language, and “the need to generate a financial return” is apparently no longer a problem.
Whether or not Altman and Musk were ever driven by the pure, altruistic zeal of that first mission statement (or whether, for instance, they knew it would provide air cover as they grew), this is a case about greed and hypocrisy. It is about what happens when you profess one motivation while pursuing another.
At stake is a judgment that exceeds the total value of all but 50 countries in the world. But this case, between two people, neither of whom formally owns any stock in the for-profit entity, also suggests motives far more personal than financial gain. At stake is credit for the founding myth and control of the future.
The AI Corner has a far more entertaining take:
The more interesting story is in the hundreds of court filings that dropped in the 6 months leading up to the trial. Cringey texts. Private diary entries. Depositions about rhino ketamine at Burning Man. Zuckerberg privately offering Musk favors. A board member who was secretly the mother of four of Musk’s children.…“We are about to witness the landing of the Hindenburg on the deck of the Titanic. We know it’s going to be crazy and nasty,” Andrew Stoltmann, corporate litigation lawyer, on the Musk vs Altman trial.…The annual festival in Nevada’s Black Rock Desert is a well-documented pilgrimage for Silicon Valley’s elite. OpenAI’s lawyers argue that Musk’s attendance in 2017 coincided with the thick of negotiations among him, Altman, Brockman, and others over shifting OpenAI’s nonprofit status.
The pointed question from OpenAI’s legal team is whether Musk was capable of meaningful negotiation during a period when he was also attending Burning Man and allegedly using drugs.
In his September 2025 deposition, Musk was repeatedly asked about “rhino ketamine,” a concoction described in filings as “commonly a mixture of the hallucinogenic and anesthetic drug ketamine and amphetamine stimulants.”
Now that we know there are no good guys at the OpenAI trial and that things will definitely get spicy, let’s get our scorecards and learn about the players.
Who’s Who at the OpenAI Trial
Business Insider has an excellent look at the top nine players to watch at the OpenAI trial:
Elon Musk is due to spend at least six hours testifying.Musk has held many titles. For the nine federal jurors being seated in Oakland in his civil case against Altman, three other titles will take priority: OpenAI investor, plaintiff, and testifying witness.
Sam Altman has also committed to spending at least six hours on the stand.Altman could be personally on the hook for any cash award, and Musk wants him ousted from OpenAI’s nonprofit board and as CEO.
US District Court Judge Yvonne Gonzalez Rogers will preside over the jury trial and determine any compensation.She has credited Musk’s lawsuit as worthy of trial, saying in a March 2025 ruling that, based on the evidence she’s seen, his main claim — that Altman broke a contractual promise to keep OpenAI solely nonprofit — is a “toss up.”
Microsoft CEO Satya Nadella is scheduled for a half-day of testimony.Musk’s lawsuit says both Microsoft and OpenAI — both are named as defendants — were “unjustly enriched” by their ongoing, six-year partnership. Explaining the partnership will take up much of Nadella’s testimony.
OpenAI cofounder Greg Brockman is scheduled to testify for five hours about the company’s origins and Musk’s early role.
Shivon Zilis is scheduled to take the witness stand for three hours.Musk’s longtime collaborator, moving from Tesla to OpenAI, where they met in 2016, and then to xAI, where she helped with its 2023 founding. The two are co-parenting their four children. A director at Neuralink, Musk’s brain-computer interface venture, Zilis is also a plaintiff in the case.
Ilya Sutskever, another OpenAI co-founder, is a key witness for Altman.(Sutskever) helped lead the mutiny that briefly ousted Altman from OpenAI. In a 52-page memo, he accused Altman of “a consistent pattern of lying” — only to quickly atone, joining a letter signed by 95% of OpenAI employees demanding Altman’s reinstatement as CEO. Sutskever resigned from OpenAI six months later to cofound a research lab, Safe Superintelligence…
Mira Murati may make a brief appearance at the trial — possibly only on camera.She served as chief technology officer from 2022 to 2024, helming the teams that developed ChatGPT and image generator Dall-E 2. Murati stepped in for three days as interim CEO after Altman’s brief, 2023 firing.
Musk’s financial advisor, Jared Birchall, may testify for just over an hour. Altman’s side is eager to question him.
With a lineup like this, the court is facing some unusual tests in the OpenAI trial.
Trying the Rich and (In)Famous
Bloomberg Law addressed some of the challenges facing the judge and jury at the OpenAI trial:
A case pitting two powerful and wealthy figures against each other poses another odd dynamic: neither party can credibly lay claim to a sympathetic, underdog narrative.
It’s possible that “they’re all equally liked or they’re all equally disliked,” Judge Yvonne Gonzalez Rogers said while discussing jury selection last month in the US District Court for the Northern District of California. “I don’t know if it cuts one way or the other.”
“The Venn diagram between people who have strong feelings about Elon Musk and strong feelings about Sam Altman probably overlaps quite a lot,” said Adam Shlahet, a trial advocacy professor at Fordham Law School.
Musk, the world’s richest person, brings with him all the baggage of his political ties to President Donald Trump and the American right. Altman has also faced growing criticism, especially after signing an agreement to work with the Department of Defense and recent news reports of his alleged misrepresentations to OpenAI board members.
After Musk lost a Twitter investor class action trial last month in San Francisco, Musk’s legal team argued that the jury showed an overt bias toward him when they appeared to make a joke in the verdict form. Lawyers pointed to the jury’s decision to use blue ink for the number $4.20 while writing other numbers in black ink.
Judge Charles R. Breyer, who ran that trial, during jury selection compared Musk’s celebrity status to that of a president, and said it would be impossible to impanel a jury that had no feelings about him.
How’s the OpenAI trial going so far?
Musk and Attorney Molo Speak at OpenAI Trial
In the first day of the trial (where local channel KTVU noted that Musk arrived in a Cadillac, not a Tesla), the plaintiff got to start speaking his piece. NPR quoted Musk attorney Steve Molo’s opening statement, here are some notable quotes:
Steve Molo: Ladies and gentlemen, we are here today because the defendants in this case stole a charity.
(OpenAI) enriched themselves, they made themselves more powerful, and they breached the very basic principles on which the charity was founded.
Everybody seems to know Mr. Musk and everybody seems to have an opinion about Mr. Musk. The case isn’t about Mr. Musk, it’s about the defendants.
As AI became more advanced, Elon became more worried.”
NPR: Molo said (Musk was) particularly (worried) about the idea that the government was not doing enough to curtail these risks. That led him to develop OpenAI along with Altman, Molo said, as a nonprofit intended to develop safer AI.
Molo:It wasn’t a vehicle for people to get rich. And they wanted the technology to be open.
Without Elon Musk there would be no OpenAI, pure and simple.
The NYT summarized Musk’s first day of testimony:
Mr. Musk, the first witness called by his lawyers, recounted his formative years leading to the creation of OpenAI, including a stint as a young lumberjack — a surprise to many in the courtroom — and his belief that he could help shape the future through technology.
Thirty minutes into this trip through his career, Mr. Musk said the goal of Neuralink, his start-up that aims to implant computer chips in people’s heads, is “A.I. safety.”
“If we can achieve an A.I.-human symbiosis,” he said. “We can achieve an A.I. that is better for humanity.”
Throughout his testimony, Mr. Musk said his various companies were efforts to benefit humanity. He said he created OpenAI after a chat with the Google co-founder Larry Page, who called Mr. Musk a “specieist,” meaning a person who favors humans over the digital life-forms of the future.
“I wanted a company to be a counterweight to Google — to be the opposite of Google,” he said. This company would not have a “profit motive,” he added, and would freely share its technology with the rest of the world. He painted himself as the driving force behind building the nonprofit A.I. lab before it was taken away from him.
“I came up with the name, recruited the key people, and raised the funding,” Mr. Musk said. He acknowledged that he was part of discussions to create a for-profit part of the enterprise but he wanted to keep the for-profit small. A for-profit was fine, he added, “as long as the tail did not wag the dog.”
We also need to look at the co-defendant in the OpenAI trial, Microsoft and their ever-complicated relationship with the purveyor of Large Language Models.
Breaking Up Is Hard to Do But MSFT and OpenAI Are Doing It
I’ve posted previously about OpenAI’s big deal with Amazon that had Microsoft weighing legal action.
Now Microsoft seems to be moving on from OpenAI, via VentureBeat:
Microsoft on Thursday launched three new foundational AI models it built entirely in-house — a state-of-the-art speech transcription system, a voice generation engine, and an upgraded image creator — marking the most concrete evidence yet that the $3 trillion software giant intends to compete directly with OpenAI, Google, and other frontier labs on model development, not just distribution.
The trio of models — MAI-Transcribe-1, MAI-Voice-1, and MAI-Image-2 — are available immediately through Microsoft Foundry and a new MAI Playground. They span three of the most commercially valuable modalities in enterprise AI: converting speech to text, generating realistic human voice, and creating images. Together, they represent the opening salvo from Microsoft’s superintelligence team, which Suleyman formed just six months ago to pursue what he calls “AI self-sufficiency.”
The announcement lands at a precarious moment for Microsoft. The company’s stock just closed its worst quarter since the 2008 financial crisis, as investors increasingly demand proof that hundreds of billions of dollars in AI infrastructure spending will translate into revenue. These models — priced aggressively and positioned to reduce Microsoft’s own cost of goods sold — are Suleyman’s first answer to that pressure.
So MSFT CEO Satya Nedella’s testimony at the trial ought to be very interesting. Like many of the players set to testify he will have competing loyalties.
Unfortunately for Musk, Altman and everyone else involved, the world is not stopping while the trial is held and a number of interesting developments relating to both empires have been dropping.
Let’s take a quick look.
OpenAI Badly Whiffs on Revenue and Traffic Goals
The Wall Street Journal has the deets:
Chief Financial Officer Sarah Friar has told other company leaders that she is worried the company might not be able to pay for future computing contracts if revenue doesn’t grow fast enough, according to people familiar with the matter.
Board directors have also more closely examined the company’s data-center deals in recent months and questioned Chief Executive Sam Altman’s efforts to secure even more computing power despite the business slowdown, the people said.
The spending scrutiny is constraining Altman’s once-boundless ambitions ahead of a potential initial public offering that could take place by the end of the year. Friar and other executives are now seeking to control costs and instill more discipline in the business, at times putting them at odds with their CEO, people familiar with the issue said.…OpenAI missed an internal goal of reaching one billion weekly active users for ChatGPT by the end of last year, according to people familiar with the goals. The company still hasn’t announced that milestone, unnerving some investors. It also missed its yearly revenue target for ChatGPT as well after Google’s Gemini saw massive growth late last year and ate into OpenAI’s market share, the people said. The company has also struggled with defection rates among subscribers, according to people familiar with those figures.
OpenAI missed multiple monthly revenue targets earlier this year after losing ground to Anthropic in the coding and enterprise markets, people familiar with its finances said.OpenAI recently raised $122 billion in what was the largest funding round in Silicon Valley history, putting it on more solid financial footing. But the company has signed up for so much computing power that it expects to burn through that amount in the next three years, assuming that it meets ambitious revenue targets. Some of the funding is also conditional and depends on specific agreements with partners.
Business Insider stirs the pot with a report titled, “Why do we keep seeing stories about a clash between Sam Altman and his CFO?”
Earlier this month, The Information reported that Friar had been frozen out of some key meetings, and had “told some colleagues earlier this year that she didn’t believe the company would be ready to go public in 2026.”…Shepherding OpenAI through a mammoth IPO — likely at a valuation of more than $1 trillion — is the core job for the company’s CFO. If she and her CEO aren’t aligned — and are so far out of alignment that reporters keep hearing about it — that makes the job way harder.
Earlier this month, when I noted The Information’s piece about a rift between Friar and Altman (which happened to run shortly before The New Yorker’s withering profile of Altman), OpenAI sent me this statement, attributed to both of them:
We are fully aligned that durable access to compute is at the core of OpenAI’s strategy and a key differentiator as we scale. We have both been directly involved in every consequential compute decision over the past year plus. The $122 billion round locks in the capacity to scale compute aggressively and positions us to become the core infrastructure layer for AI, translating that advantage into sustained leadership across research and products, and making it possible for people around the world and businesses, big and small, to just build things.
On Tuesday, the company sent me this statement, also attributed to the pair, in response to the WSJ story: “This is ridiculous. We are totally aligned on buying as much compute as we can and working hard on it together every day.”
There’s also the little question of what The Wall Street Journal called “Sam Altman’s Side Hustles”:
When Sam Altman was briefly fired, then rehired as OpenAI CEO in 2023, the company’s board of directors had fretted over what little they knew about his personal investments and whether they posed potential conflicts.…(Altman) recently asked OpenAI to lead a funding round for Helion after the nuclear-fusion startup fell behind on promises of a breakthrough energy source and began to run short on cash. Altman is one of Helion’s largest investors, and a sizable chunk of his net worth is tied up in the company.
Altman also sought OpenAI backing for Stoke Space, a rocket-maker aiming to challenge Elon Musk’s SpaceX. Altman is a shareholder through Hydrazine, his venture-capital-firm- turned-family-office, according to people familiar with the matter, financial ties that haven’t previously been reported.
Neither investment currently represents a core business for OpenAI…
OpenAI’s lead in the AI race is slipping after spending years as Silicon Valley’s darling startup. Altman, who holds no direct equity in the company, has unloaded many of his managerial responsibilities. Some initiatives he previously championed, including the video-generation app Sora, have been rolled back.
OpenAI’s leaders and largest investors say they support Altman, crediting him with the company’s success. Yet some shareholders have begun to privately question whether he should lead OpenAI through the turbulence of going public and have floated board chair and former Salesforce co-CEO Bret Taylor as a potential successor, said people familiar with the matter.
But OpenAI and Sam Altman aren’t the only side with troubles in this tussle.
Tesla Under Strain
Since the last time I covered his antics, Musk seemingly pulled off another just in time miracle with last week’s Tesla earnings call.
But at least one analyst is skeptical.
That would be George Noble:
3 months ago, Tesla guided to “over $20 billion” in 2026 capital expenditure. Last night they raised it to over $25 billion. A $5 billion increase in a single quarter. That’s 3x their historical annual capex run rate – $8.5 billion in 2025, $11.3 billion in 2024. The CFO confirmed on the call that Tesla expects NEGATIVE free cash flow for the rest of the year.
So you have a company generating roughly $6 billion in annual free cash flow on a good year, and they’re about to spend $25 billion.
The math doesn’t work.…here’s what really kills the bull case…
The entire valuation rests on robotaxis, Optimus robots, and autonomy. So let’s put numbers on it:
…
Tesla has 3.75 billion shares outstanding. So even if you assign $126 billion in robotaxi value (giving Tesla full credit for matching Waymo despite being nowhere close) that’s $33 a share. Add the auto business at generous auto-industry multiples, maybe $20 a share. Throw in energy storage and services, $10-15.
Sum of the parts gets you to roughly $65-70 a share if you’re feeling generous. Maybe $50 if you’re not.
The stock is $387.
So what exactly are you paying for?
You’re paying for a STORY. You’re paying for PROMISES that keep getting pushed back, technology that keeps falling short, and a business plan that requires spending $25 billion a year while the core product sells fewer units at declining margins in a market where California sales just fell 24% and the federal EV tax credit is gone.…Tesla at $387 is one of the most egregious mispricings I have seen in my entire career.
THE CRASH WILL BE EPIC.
That it may be, but it should be fun to cover.
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