A federal jury in San Francisco is set to begin deliberations on May 14, 2026, to determine if Elon Musk breached a 2015 oral agreement with Sam Altman, Greg Brockman, and others to fund OpenAI as a non-profit AI research lab. The trial, labelled the biggest tech court case of the year, focuses on Musk’s alleged failure to fulfill his $1 billion funding pledge and his 2023 launch of xAI, a competing AI company 1.
OpenAI filed the lawsuit in November 2023, accusing Musk of fraud and breach of contract for backing out of his 2015 promise to provide $1 billion over several years. Court filings show Musk contributed only $100 million before ceasing support in 2018, citing disagreements over OpenAI’s transition to a capped-profit model. OpenAI’s lawyers argue Musk’s exit and creation of xAI violated the original agreement’s non-profit, open-source AI development goals 1.
Musk’s defense, led by attorney Alex Spiro, claims the 2015 agreement was never formalized in writing and that OpenAI’s 2019 shift to a for-profit structure nullified prior commitments. Spiro argued in court filings that Musk’s departure was justified because OpenAI’s new direction aligned with corporate interests rather than its initial humanitarian mission. The defense also cited Musk’s public criticism of OpenAI’s Microsoft partnership, which he said compromised the lab’s independence 1.
The jury must decide two main questions: whether the 2015 oral agreement was a legally binding contract and whether Musk’s actions after leaving OpenAI, including launching xAI, breached that agreement. Legal experts note that oral contracts are enforceable in California but require clear proof of mutual intent. OpenAI has submitted emails and witness testimony from Altman and Brockman to support the claim Musk verbally committed to the $1 billion pledge 1.
The trial has attracted wide attention due to its implications for AI governance and corporate responsibility. OpenAI’s lawyers argue Musk’s withdrawal forced the lab to seek other investors, including Microsoft, which now holds a 49% stake in OpenAI’s for-profit arm. They claim this shift undermined OpenAI’s original mission to develop AI for public benefit. Musk’s team counters that OpenAI’s current $90 billion valuation and lucrative licensing deals contradict its non-profit origins 1.
Jury instructions released on May 13, 2026, state the panel must determine if Musk’s actions caused financial harm to OpenAI. If the jury sides with OpenAI, Musk could owe damages potentially in the billions, based on the lab’s valuation. The case also includes a secondary claim that Musk misappropriated OpenAI’s trade secrets to develop xAI, though analysts suggest this claim is weaker due to lack of direct evidence 1.
The trial has reignited debate over AI developers’ ethical responsibilities and risks of commercialising advanced technology. OpenAI founders Altman and Brockman testified that the 2015 agreement was founded on a shared vision to counterbalance tech giants like Google and Facebook. Musk has publicly accused OpenAI of abandoning its non-profit principles, calling its Microsoft partnership a "betrayal" in a 2023 interview with The New York Times 1.
The trial’s outcome could set a precedent for enforcing oral agreements in the tech sector, especially in fast-changing fields like AI. Legal scholars say the case highlights the challenge of balancing innovation with ethical commitments when founders’ visions diverge. A ruling for OpenAI may encourage other non-profits to pursue legal action against former backers who withdraw support, while a ruling for Musk could reinforce that informal agreements lack enforceability without written proof 1.