OpenAI was founded in December 2015 by a group of tech visionaries, including Sam Altman, Elon Musk, Ilya Sutskever, Greg Brockman, and others. Their mission was to develop artificial intelligence in a way that benefits all of humanity. OpenAI is headquartered in San Francisco, California, nestled in the heart of Silicon Valley, what some say is the global hub for technology and innovation.

Initially, OpenAI was a non-profit organization, but in 2019, it transitioned to a capped-profit model to attract more funding and talent. The organization consists of the non-profit OpenAI, Inc., registered in Delaware, and its for-profit subsidiary introduced in 2019, OpenAI Global, LLC. Microsoft owns roughly 49% of OpenAI’s equity, having invested US$13 billion. It also provides computing resources to OpenAI through its cloud platform, Microsoft Azure.

A dispute between OpenAI and Elon Musk has been brewing for some time. Musk, who was one of the co-founders and early investors in OpenAI, has been critical of the organization’s direction and its shift towards a for-profit model.There has been an ongoing power struggle within OpenAI, with Musk and Altman having differing visions for the company’s future.

Musk has taken legal action against OpenAI, claiming that the organization is violating the terms of his foundational contributions. He has also accused OpenAI of unfairly stifling business competition, particularly with his own AI startup, xAI. 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”.

“Something is going to trial in this case,” US District Judge Yvonne Gonzalez Rogers in Oakland, California, said earlier this month as Judge Rogers was considering Musk’s recent request for a preliminary injunction to block OpenAI’s conversion before going to trial.

The stakes on OpenAI’s corporate transition have now escalated, as OpenAI’s last fundraising round of $6.6bn and a new round of up to $25bn under discussion with SoftBank are conditioned on the company restructuring to remove the nonprofit’s control.

Recently, Musk led a group of investors in an unsolicited $97.4 billion bid to buy OpenAI. This bid was unanimously rejected by OpenAI’s board over the weekend. OpenAI has accused Musk of contradicting his own lawsuit with his takeover bid, arguing that his actions are at odds with his legal claims.

AI models like ChatGPT, has become a dominant force in the field. Musk’s vision of a more open-source, safety-oriented approach to AI development stands in contrast to OpenAI’s evolving business model, which increasingly focuses on monetization. The situation remains dynamic, with both legal and business maneuvers playing out publicly.