OpenAI countersues Elon Musk to halt 'unfair' attacks

The bitter feud between OpenAI and its estranged co-founder Elon Musk just took a sharp turn into an all-out courtroom counteroffensive.

On Wednesday, attorneys for OpenAI and CEO Sam Altman filed a countersuit against Musk, urging a federal judge to enjoin him from further unlawful and unfair actions and hold him financially liable for the damages he has already caused.

OpenAI pulled no punches in its filing, claiming Musk's relentless attacks, culminating in a fake takeover bid, were specifically designed to disrupt the company's future. Over on X, OpenAI stated plainly that Musk is using bad-faith tactics to slow the startup down and seize control of cutting-edge AI for his own personal gain.

A battle over the soul and the structure

Musk's original lawsuit accused OpenAI of abandoning its founding altruistic mission to benefit humanity. While OpenAI started as a pure nonprofit in 2015, it adopted a capped-profit model in 2019 and is now working to restructure into a public benefit corporation.

Musk previously tried to secure a preliminary injunction to freeze this transition. In March, a federal judge rejected that halt, scheduling a full jury trial for the spring of 2026. Musk's attorney Marc Toberoff fired back, arguing Musk's takeover bid was entirely serious and that calling fair-market value payments interference is telling.

The pressure on Altman's team is intense. OpenAI reportedly faces a ticking clock: it must complete its for-profit conversion within 2025, or risk having to return a significant chunk of recently raised capital.

Pressure mounts in California

Musk isn't the only headache OpenAI has to manage right now.

This week, a coalition of labor and nonprofit organizations, including the California Teamsters, petitioned California Attorney General Rob Bonta to halt OpenAI's corporate transition. The coalition accused the startup of subverting its charitable mission and failing to protect public assets, echoing warnings filed in December by Encode, a sponsor of the state's controversial SB 1047 safety bill.

OpenAI pushed back, insisting the restructuring will preserve its charitable wing and fund massive initiatives in healthcare, education, and science, even claiming it will become the best-equipped nonprofit in the world.

Why it matters

For anyone watching the frontier model race, this isn't just silicon billionaire drama. It directly threatens OpenAI's financial engine. With reports indicating OpenAI must convert to a for-profit by 2025 to keep recent investments intact, Musk does not even need to win his lawsuit outright. If his legal maneuvers and takeover theatrics introduce enough friction to run out the clock, he scores a major blow against his primary rival, giving xAI critical room to catch up.

We think OpenAI's decision to countersue signals real urgency. The company can no longer afford to treat Musk as a loud online critic; his interventions are actively jeopardizing its core corporate timeline. However, OpenAI still looks structurally vulnerable. Even if it manages to legally sideline Musk, convincing California regulators and public interest groups that shifting corporate control out of a charity serves the public interest remains an exceptionally tough sell.