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Musk sues to block OpenAI's conversion to a for-profit

structure

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Musk cofounded OpenAI with Altman in 2015

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OpenAI argues for-profit move needed for capital

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Nonprofit to for-profit conversion rare, expert says

OAKLAND, Calif., Feb 4 (Reuters) - - Lawyers for Elon

Musk and ChatGPT maker OpenAI are set to butt heads in the

courtroom on Tuesday as a judge will hear arguments on Musk's

lawsuit to halt OpenAI's conversion to a for-profit entity.

Musk's request to block OpenAI's conversion is the latest

move in a grudge match between the world's richest person and

OpenAI CEO Sam Altman that is playing out publicly in court.

The hearing will take place at a U.S. federal court in the

Northern District of California.

Musk cofounded OpenAI with Altman in 2015, but left before

the company took off and subsequently founded the competing AI

startup xAI in 2023.

OpenAI is now trying to transition from a nonprofit into a

for-profit entity, which it says it needs to do to secure the

capital required to develop the best artificial intelligence

models.

Last year, Musk filed a lawsuit against OpenAI and Altman,

saying that OpenAI's founders originally approached him to fund

a nonprofit focused on developing AI to benefit humanity, but

that it is now focused on making money.

He later expanded the lawsuit to add federal antitrust and

other claims, and in December asked the judge presiding over the

case to stop OpenAI from transitioning to a for-profit.

In response to Musk's lawsuit, OpenAI has said it will move

to dismiss Musk's claims and that Musk "should be competing in

the marketplace rather than the courtroom."

The stakes on OpenAI's corporate transition have now

escalated, as OpenAI's last fundraising round of $6.6 billion

and a new round of up to $25 billion under discussion with

SoftBank are conditioned on the company restructuring

to remove the nonprofit's control.

Such a restructuring would be highly unusual, said Rose Chan

Loui, executive director of the UCLA Law Center for Philanthropy

and Nonprofits. Nonprofit conversions to for-profits have

historically been for health care organizations like hospitals,

not venture capital-backed companies, she said.