Jason Kwon, OpenAI’s head of strategy, celebrated with a team of lawyers in a federal courthouse in Oakland, Calif., on Monday, after Elon’s Musk’s $150 billion lawsuit against the artificial intelligence company was rejected by a nine-member jury in less than two hours.
But Mr. Kwon and OpenAI cannot afford to celebrate for very long.
Although the decision left OpenAI free to continue with its plans for an initial public offering as soon as this year, the company still faces a long list of other challenges as it approaches what could be one of the largest Wall Street debuts in history.
Rival A.I. companies like Anthropic and Google are rapidly improving their technologies, giving OpenAI far more competition than it faced during the first three years of the A.I. boom. Dozens of other lawsuits accuse OpenAI of everything from copyright infringement to wrongful death. And Mr. Musk has already vowed to appeal Monday’s decision.
In a lawsuit filed in 2024, Mr. Musk accused OpenAI, its chief executive, Sam Altman, and its president, Greg Brockman, of breaching the A.I. lab’s founding agreement by putting commercial gain over the public good. Mr. Musk founded OpenAI as a nonprofit in 2015 alongside Mr. Altman and Mr. Brockman, before leaving in a struggle for power.
After Mr. Musk left, Mr. Altman attached a commercial company to the original nonprofit and began raising billions of dollars from Microsoft. OpenAI is now valued at $730 billion.
Mr. Musk asked for a court order unraveling another move OpenAI made last year to give the for-profit company more control. On Monday, after less than two hours of deliberation, the jury said that he had not filed his suit before the expiration of a statute of limitations. It did not actually consider his claims, and Judge Yvonne Gonzalez Rogers dismissed them after the jury’s decision.
If Mr. Musk had succeeded, OpenAI’s plans to go public would have been caught in limbo. But now that its plans can move ahead, OpenAI faces significant business challenges.
Though it has raised tens of billions of dollars in funding over the past several years, OpenAI remains a long way from being profitable. Investors may expect it to close the enormous gap between how much money is heading out the door and how much it is taking in.
The company’s revenues are on the rise amid the rising popularity of Codex, an OpenAI technology that is particularly good at writing computer code. And the company has a new revenue stream now that it has started to serve ads inside ChatGPT. But the competition is doing the same.
In November, Google ratcheted up the pressure when it released a new A.I. model called Gemini 3, saying the technology had surpassed OpenAI’s leading technology and was now the best in the world. Anthropic also started grabbing big chunks of the market with its A.I. technology, called Claude.
In just a few months, Anthropic added thousands of big business customers and more than doubled the revenue it expects to see this year to $19 billion, up from $9 billion last year. A high-profile disagreement with the Defense Department raised Anthropic’s public profile, and its smartphone app climbed to the No. 1 spot in Apple’s App Store.
Anthropic grabbed more headlines when it unveiled a new A.I. system called Claude Mythos and said the technology was too powerful to share with the general public, because hackers could use it to exploit security holes in computer networks with unusual speed. Anthropic shared the technology with only about 40 organizations, so they could use it shore up holes in common internet infrastructure.
OpenAI released its own technology designed specifically for cybersecurity. And its technologies continue to outperform most systems on the market, according to standard benchmarks. But Google is a formidable rival in the ad market. And after Anthropic’s sudden rise, OpenAI faces a battle as it tries to sell its technology to businesses.
In an effort to meet its soaring demand, Anthropic recently made a deal with Mr. Musk’s firm SpaceX to use all of the computing capacity from the rocket company’s Colossus 1 data center in Memphis.
Google and Anthropic declined to comment on the verdict in the trial.
As OpenAI fights its rivals, it also faces myriad battles in the courts.
Book authors, publishers and news organizations have sued OpenAI for copyright infringement, claiming their copyrighted works were illegally used to train its A.I. systems. Many parents and other groups have sued the company for negligence and wrongful death, claiming that ChatGPT contributed to various suicides and school shootings.
(The New York Times has sued OpenAI and Microsoft, claiming copyright infringement of news content related to A.I. systems. The two companies have denied the suit’s claims.)
And despite Monday’s decision, the company still faces a legal challenge from Mr. Musk because he and his lawyers said they would appeal.
“The judge and jury never actually ruled on the merits of the case, just on a calendar technicality,” Mr. Musk said in a social media post. “There is no question to anyone following the case in detail that Altman & Brockman did in fact enrich themselves by stealing a charity. The only question is WHEN they did it!”
Peter Molk, a law professor at the University of Florida who specializes in corporate structures, said that while Mr. Musk lost in court on Monday, there was still a chance this case could stir anger in the court of public opinion. And that, he said, could get the attention of the state attorneys general who approved the company’s new for-profit structure.
“This could raise some concerning flags that the state attorneys general could have a reason to revisit OpenAI’s structure,” he said.
Catherine Bracy, who helps lead a coalition of organizations called EyesOnOpenAI, said people should continue to question OpenAI’s restructuring as for-profit. Ms. Bracy, who was in the courtroom for much of the trial, has long complained that California’s attorney general, Rob Bonta, allowed OpenAI’s restructuring to move forward.
“In light of the mounting evidence of OpenAI’s unlawful abdication of its nonprofit mission,” she said, Mr. Bonta “must revisit his agreement with OpenAI, order an independent valuation of the nonprofit’s assets and compel their transfer to a truly independent charitable entity.”
