Elon Musk is dealt a devastating legal blow that may set him back
The world's wealthiest man is learning that there are limits to his power.
Samuel O'BrientMar 5, 2025 8:33 PM EST
Start Conversation
Often considered the serial entrepreneur of his generation, Elon Musk is no stranger to juggling many responsibilities.
After years of running Tesla (TSLA) , SpaceX and xAI, among other companies, he recently took on a new position at the helm of the so-called Department of Government Efficiency (DOGE), a role that seems to be occupying most of his time these days.
💰💸 Don’t miss the move: SIGN UP for TheStreet’s FREE Daily newsletter 💰💸
However, despite his vast portfolio of companies that span different industries, Musk recently tried to expand it even further, offering to acquire one of the most popular names in tech, shocking many people.
This quest has a new development, suggesting that even Musk’s vast resources and significant reach may not be enough to move the needle in his favor, a phenomenon that he likely isn’t used to.
BEVERLY HILLS, CALIFORNIA - MAY 6: Elon Musk, co-founder of Tesla and SpaceX and owner of X Holdings Corp., speaks at the Milken Institute's Global Conference at the Beverly Hilton Hotel,on May 6, 2024 in Beverly Hills, California. The 27th annual global conference explores various topics, from the rise of generative AI to electric vehicle trends and features participants, soccer star David Beckham and actor Ashton Kutcher. (Photo by Apu Gomes/Getty Images)
Elon Musk, co-founder of Tesla and SpaceX is facing complications regarding a recent deal he has so far failed to make. (Photo by Apu Gomes/Getty Images)
Apu Gomes/Getty Images
Musk’s latest acquisition target is moving further out of his reach
In February 2025, Musk made an announcement that likely shocked many people, even those who follow his moves closely. Accompanied by other group members, he submitted an offer to acquire OpenAI, the artificial intelligence (AI) research organization responsible for creating ChatGPT.
One of OpenAI’s original founders and investors, Musk has a well-documented feud with CEO Sam Altman dating back to his exit in 2018. Altman quickly rejected Musk’s offer and jokingly chided him for his purchase of Twitter (now X), which has plummeted in value since Musk purchased it in 2022.
WASHINGTON, DC - JANUARY 20: Tesla, SpaceX and X CEO Elon Musk arrives to speak during an inauguration event at Capital One Arena on January 20, 2025 in Washington, DC. Donald Trump takes office for his second term as the 47th president of the United States. (Photo by Christopher Furlong/Getty Images)
Elon Musk's latest move shocks tech world
Read More
However, Musk’s attempts to exert power over OpenAI go back even further. In 2024, he sued the nonprofit lab, alleging that it had betrayed its principles and begun prioritizing profits over responsible AI research as it transitioned to a for-profit model.
Yesterday, U.S. District Judge Yvonne Gonzalez Rogers denied Musk’s bid to pause the OpenAI transition, citing a lack of “the high burden required for a preliminary injunction” on his part.
She added that she would consider holding a trial to resolve the matter as early as Fall 2025, “given the public interest at stake and potential for harm if a conversion contrary to law occurred.”
When Musk asked for a court order to stop OpenAI’s for-profit transition, he added xAI as a plaintiff, arguing that the organization’s practices were unfairly stifling industry competition.
Musk’s attorney previously amplified Musk’s arguments, claiming that if OpenAI is allowed to continue its for-profit conversion, it will mean “irreparable harm” for Musk, xAI, and its investors, as well as the general public. That said, it is not clear how the general public would be impacted by OpenAI switching from its non-profit model.
OpenAI considers taking drastic action to stop Elon Musk
Elon Musk's recent DOGE decision raises major red flags
As Tesla stock plunges, burning questions surround Elon Musk
Gonzalez Rogers expressed some skepticism at these claims last month, describing them as a “stretch,” though she highlighted the importance of the case moving to trial.
OpenAI hits back at Musk’s claims of unfair practices
OpenAI doesn’t appear worried about Musk’s allegations. It released a statement responding to these claims, suggesting that Musk may have personal incentives that are not necessarily aimed at the public good.
Elon Musk has challenged claims made by OpenAI CEO Sam Altman in a new battle that may come to define modern Silicon Valley
Elon Musk, Sam Altman brawl over major AI deal
Read More
“This has always been about competition,” the statement notes. “Elon’s own emails show that he wanted to merge a for-profit OpenAI into Tesla. That would have been great for his personal benefit but not for our mission or U.S. interests.”
Following Musk’s offer, though, OpenAI considered making a drastic change regarding its board of directors. By granting them “outsized voting power,” the organization’s leaders could technically ensure that its board did not lose control as OpenAI restructured.
Based on the recent court developments, though, it seems that they don’t need to take that type of action, at least not yet. It remains unclear how things will go once the trial reaches a jury, likely in the Fall of 2025.
Doug Kass, president and founder of Seabreeze Partners, speaks during a Bloomberg Television interview in New York, U.S., on Thursday, Aug. 11, 2016. Kass discussed the 2016 presidential elections. Photographer: Christopher Goodney/Bloomberg via Getty Images
Veteran fund manager unveils eye-popping S&P 500 forecast
Read More
TeslaArtificial IntelligenceTechnology Hardware & EquipmentElon MuskTechnology
Samuel O'Brient
By Samuel O'Brient
Samuel O'Brient is a tech markets reporter for TheStreet, covering the ever-evolving world of technology and the companies that drive it.
| |
