The jury’s decision in the lawsuit against OpenAI leaves unresolved questions about what the organization owes society, a Fletcher expert says
A jury rejected Elon Musk's case against OpenAI, but the trial has drawn attention to the contrast between OpenAI’s sweeping public mission and its pursuit of profit as one of the world’s most powerful technology companies. Photo: Shutterstock
Coverage of Elon Musk’s lawsuit against OpenAI has centered on the high-profile clash between Musk and OpenAI CEO Sam Altman. But the case has brought attention to a bigger question that remains even after Musk’s courtroom loss: How should the public hold AI companies accountable?
Alnoor Ebrahim has been asking that question for a while. The Thomas Schmidheiny Professor of International Business at The Fletcher School and Tisch College, Ebrahim studies how mission-driven organizations govern themselves, measure their impact, and stay accountable to the people they claim to serve.
OpenAI has become a revealing case, he says, because it has moved from its nonprofit origins toward a profit-driven structure. “The trial has laid bare the contrast between OpenAI’s sweeping public mission and the capital demands and investor pressures it faces as one of the world’s most powerful technology companies,” he adds.
Founded in 2015 as a nonprofit, OpenAI created a for-profit subsidiary in 2019 and more recently converted that subsidiary into a public benefit corporation, a formal structure that allows it to raise private capital and pursue a profit while retaining its social mission.
In the civil lawsuit heard in federal court in Oakland, California, Musk alleged that Altman and OpenAI betrayed the organization’s founding nonprofit mission as it restructured to bring in more private investment. OpenAI argued that Musk, a co-founder and major early funder of the organization, had supported earlier for-profit plans and was trying to undermine the group to boost his own competitor company, xAI, which he launched in 2023.
Pursuing private capital as OpenAI is doing under the leadership of CEO Sam Altman (pictured) isn’t a problem, says Alnoor Ebrahim of The Fletcher School and Tisch College. “The question is whether the organization has the guardrails and good governance in place to prioritize purpose over profit.” Photo: Shutterstock
The jury ruled against Musk after less than two hours of deliberation, finding that his claims had been filed too late; the judge accepted the advisory verdict, but Musk's lawyers reportedly plan to submit an appeal. Either way, for Ebrahim, the court’s decision does not answer the governance questions the trial brought into view.
Here, he discusses those questions and explains why they remain important even after the verdict.
Is there a legitimate case for OpenAI to move toward a more profit-driven structure?
Yes, but only if it stays true to its mission. It is not unreasonable for an organization with a social purpose to conclude that philanthropy alone will not allow it to achieve such a mission at scale. Building advanced AI systems requires enormous investment and infrastructure, such that market mechanisms, including private capital, may be a viable way to scale that work. The question is whether the organization has the guardrails and good governance in place to prioritize purpose over profit.
OpenAI’s mission statement has changed dramatically since it converted to a for-profit structure. Earlier language committed the organization to building artificial intelligence that “safely benefits humanity” and that is “unconstrained by a need to generate financial return.” The current version—apparently updated after it became a for-profit corporation—keeps the commitment to benefitting humanity but drops both “safely” and the language about financial return.
In my view, these changes effectively render the mission meaningless. The company will likely be able to show some benefits to humanity, but it is no longer committed to doing so safely, and it will now be under immense pressure to generate outsized returns for its investors. This steady erosion of OpenAI’s mission received surprisingly little attention during the trial and in its media coverage.
What would reassure you that the public interest is being protected?
OpenAI says the foundation—its nonprofit arm—controls the for-profit company. But it is not clear what authority the foundation actually has, how independent its oversight is, and how it will weigh safety and public benefit against investor pressure.
That explanation should come not only from OpenAI, but also from the attorneys general who approved the restructuring. State attorneys general play an important role when a nonprofit converts or restructures because they are charged with protecting charitable assets and the public interest. In this case, it is the attorneys general of California (where OpenAI is headquartered) and Delaware (where it is incorporated) who are responsible for ensuring that the new structure protects public interests. The public deserves to see the reasoning behind their approval.
“The underlying issue [raised in the OpenAI case] has merit, even if Musk is not an ideal messenger. His argument was essentially that you cannot, as he put it, ‘steal a charity’: that resources and commitments intended to serve the public should not simply be transferred into private hands.”
Under the restructuring, the foundation received a 26% stake in the for-profit company, thus giving up nearly three-quarters of its ownership. This low shareholding requires an explanation, especially because it is far below that of some earlier nonprofit-to-for-profit conversions.
The board structure and membership are also important. The new nonprofit and for-profit boards are comprised of the same people, with one exception. In other words, the same individuals are responsible for steering the market-driven enterprise and providing the nonprofit oversight meant to protect the public mission. This strikes me as a conflict of interest; after all, how can the board oversee itself?
For public accountability, at a minimum, both OpenAI’s board and the attorneys general of California and Delaware need to provide a justification for the new structure and how it protects the public interest.
How do these questions relate to the trial that just ended?
I think the underlying issue Musk raised has merit, even if Musk himself is not an ideal messenger. His argument was essentially that you cannot, as he put it, “steal a charity”: that resources and commitments intended to serve the public should not simply be transferred into private hands.
OpenAI argued that Musk left the organization well before the conversion and that his objections were motivated in part by his own interests.
But I believe it is important to separate the personalities and incentives from the larger governance issues that were at stake in the trial and that remain problematic.
It comes down to this: Is the public being shortchanged? When a nonprofit converts to a profit-driven structure, the benefits to society have to remain clear and strong. The trial brought that issue into view, but I do not think it produced the kind of explanation that is needed to help us understand how the public benefits—or loses—from this restructuring.
What does the OpenAI case suggest about the broader challenge of governing powerful AI companies?
Nonprofits receive tax benefits because they are expected to serve a public purpose, and state attorneys general have a role in protecting that public interest. We do not have the same leverage over purely for-profit companies. And most AI firms, including Google DeepMind, xAI, Meta, and Anthropic, are for-profits.
So the broader problem—of how best to govern AI companies—extends well beyond this case, or this moment. We do not yet have good governance models for overseeing organizations with the power to fundamentally reshape society. Neither corporate nor nonprofit governance models are up to the task. Nor do we have clear guidance from the state attorneys general. In the end, it is these multiple failures of governance that the trial inadvertently exposed.
