OpenAI demands investigation into Elon Musk by California and Delaware

OpenAI’s big request

OpenAI has asked the attorneys general of California and Delaware to investigate what it calls improper and anti-competitive conduct by Elon Musk and his associates. The request comes as Musk continues his legal challenge to OpenAI’s recapitalization and broader corporate restructuring.

The April 6 letter was signed by OpenAI chief strategy officer Jason Kwon. In it, Kwon argues that Musk has repeatedly tried and failed to gain control of the nonprofit for his own benefit.

What OpenAI wants now

OpenAI is asking California and Delaware officials to examine whether Elon Musk and his associates engaged in conduct that could violate competition or nonprofit oversight rules. The company says the issue matters now because its legal fight with Musk is heading toward a jury trial later this month.

Kwon wrote that Musk’s lawsuit could undermine the commitments and regulatory understandings reached with California and Delaware in October. Those October arrangements helped clear the way for OpenAI to complete its recapitalization.

The legal battle so far

Musk sued OpenAI in 2024, arguing that the company abandoned its founding nonprofit mission as it moved toward a for-profit structure. He says OpenAI’s leadership strayed from the purpose he originally supported when he helped launch the organization.

In January, a federal judge ruled that core parts of the case should go to a jury. Jury selection is scheduled to begin on April 27, 2026, in federal court in Oakland in the Northern District of California.

Elon Musk’s past with OpenAI

Believe it or not, Musk helped start OpenAI in 2015. He was a co-founder alongside Sam Altman and others. But he left the board in 2018 after disagreements. Now he runs his own AI company called xAI, which makes a chatbot named Grok.

Last year, OpenAI rejected Musk’s unsolicited bid to acquire the assets of the nonprofit that controls the company. His offer was for $97.4 billion.

Fun fact: Bloomberg reports that OpenAI gave Microsoft a 27% ownership stake in its restructuring, worth around $135 billion, while keeping the nonprofit arm in control.

Working with Zuckerberg?

OpenAI says court filings show that Musk tried to interest Meta CEO Mark Zuckerberg in his consortium’s bid for OpenAI. Public reporting says Zuckerberg did not join the $97.4 billion offer.

That supports OpenAI’s claim that Musk sought backing from a major rival. It does not, however, publicly establish a broader coordinated campaign by Musk and Zuckerberg against OpenAI.

Fun fact: A CNBC report revealed that in August 2025, OpenAI said Musk had tried to enlist rival Mark Zuckerberg for the bid his consortium made for OpenAI early last year.

Tracking and surveillance

OpenAI’s letter cites a recent New Yorker investigation detailing surveillance and opposition research targeting Sam Altman. The reporting said one Musk intermediary claimed that Altman’s flights and social activities were being tracked.

The same report also described interviews and rumor-chasing tied to allegations surrounding Altman, but those claims remain contested. OpenAI is urging state officials to examine whether any such tactics crossed legal or competitive lines.

The $134 billion lawsuit

Musk is asking for a huge amount of money in his lawsuit. He wants up to $134 billion in damages from OpenAI and Microsoft. OpenAI says that much cash would crush its nonprofit foundation. They argue Musk isn’t after justice; he’s after control of the AI future.

OpenAI’s letter said the lawsuit seeks damages of more than $100 billion from its nonprofit foundation, which it said would effectively cripple the organization.

What’s at stake for AGI?

AGI refers to artificial general intelligence, a term often used for AI systems with broad human-level or beyond-human capabilities across many tasks. OpenAI says its founding mission is to ensure that AGI benefits all of humanity.

In the April 6 letter, Jason Kwon argued that Musk’s legal campaign could shift control of that mission away from an organization with nonprofit obligations. He said OpenAI views the case as a fight over who steers the future development and governance of AGI.

SpaceX IPO connection

OpenAI’s letter raises competition concerns about Musk as SpaceX moves toward what could be a record-setting IPO later this year. Reuters reported that SpaceX confidentially filed for an IPO and has discussed valuations above $1.75 trillion, with later reporting indicating targets above $2 trillion.

OpenAI has portrayed Musk’s litigation as part of a broader competitive struggle in AI. No public evidence currently shows that a court win in the OpenAI case would directly benefit SpaceX’s listing or Grok’s market position.

xAI and Grok’s troubles

Grok has come under regulatory and legal scrutiny in multiple jurisdictions over the creation of nonconsensual sexually explicit deepfakes, including content involving women and minors. California Attorney General Rob Bonta opened an investigation in January and later sent xAI a cease-and-desist letter.

OpenAI’s letter cites those controversies as part of its broader criticism of Musk’s conduct in AI. No public evidence has shown that the alleged misuse was designed to increase Grok’s popularity ahead of an IPO.

Musk’s beef with Delaware

Musk has badmouthed Delaware for years. He moved Tesla’s legal home out of the state and reincorporated several companies in Texas and Nevada. So it’s pretty ironic that OpenAI wants Delaware’s attorney general to investigate him.

Musk also moved SpaceX from California to Texas, calling those states biased. xAI is now suing California Attorney General Rob Bonta over a new AI data transparency law.

Trial starts April 27

Jury selection in Musk’s lawsuit against OpenAI is set to begin on April 27 in federal court in Oakland. The case is expected to examine Musk’s claims that OpenAI departed from its original nonprofit mission.

Musk’s damages theory includes an argument that his roughly $38 million contribution represented about 60% of OpenAI’s early seed funding. OpenAI has already begun testing and expanding ads for ChatGPT Free and Go users in the United States.

Want to see what else OpenAI is planning as this unfolds? Take a look at how ChatGPT is being prepared for its first ads.

What happens next?

California and Delaware haven’t said if they’ll investigate. A spokesperson for California’s AG said they’re reviewing the letter. For now, the ball is in the states’ court. If they jump in, Musk could face even more legal headaches.

OpenAI’s chief strategy officer said in the letter that Musk’s lawsuit is not just against OpenAI; it is about whether there is room in the industry for a company subject to the mission and structure outlined in the October agreements.

Curious where OpenAI could be headed next? Take a look at the talk around a possible NATO connection; it’s an interesting twist.

If you found this breakdown helpful, hit that like button and drop a comment with your take on the OpenAI vs Musk showdown.

This slideshow was made with AI assistance and human editing.

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