Elon Musk dropped his fraud allegations against OpenAI, Sam Altman and Greg Brockman on Friday, slashing a sprawling 26-count lawsuit down to just two claims 72 hours before jury selection opens in Oakland.
US District Judge Yvonne Gonzalez Rogers approved Musk's request to "streamline" the case, leaving only unjust enrichment and breach of charitable trust to proceed to trial.
The move is widely interpreted as a tactical decision rather than a concession.
Fraud requires proving that a specific individual lied at a specific moment with specific intent to deceive, a notoriously high bar at trial.
Charitable trust violation is simpler: demonstrate that assets raised for one purpose were redirected to another.
OpenAI's 2019 creation of a capped-profit subsidiary, which now houses ChatGPT, its API business and more than $13 billion in Microsoft investment, makes that a more straightforward story to present to a jury.
Musk co-founded OpenAI in 2015, contributing roughly $38 million before leaving the board in 2018.
He later founded xAI in 2023, which operates the Grok chatbot and is now one of OpenAI's direct competitors.
His lawsuit, filed in November 2024, alleges OpenAI abandoned its founding mission as a nonprofit dedicated to developing artificial intelligence for the benefit of humanity when it restructured to accept commercial investment and pursue profit.
Musk is seeking up to $150 billion in damages, with any award directed to OpenAI's charitable arm rather than to him personally.
He is also asking the court to restore the organisation's nonprofit status and remove Altman and Brockman from their leadership positions.
OpenAI accused Musk of a "legal ambush" two weeks ago, complaining that some of his proposed remedies were introduced at the eleventh hour.
The company, alongside Altman, Brockman and Microsoft, has denied all wrongdoing and characterised the lawsuit as harassment driven by competitive motives.
OpenAI rejected Musk's $97.4 billion unsolicited bid for the nonprofit's assets in February 2025 and subsequently completed its for-profit restructuring, clearing the path for further capital raises and a potential public listing that could value the company at up to $1 trillion.
The trial will unfold in two phases before Judge Gonzalez Rogers, who presided over the landmark Epic Games v Apple antitrust case.
In the first phase, a nine-person jury will hear testimony from a witness list that includes Microsoft chief executive Satya Nadella, former OpenAI chief technology officer Mira Murati, co-founder Ilya Sutskever and former board member Shivon Zilis.
The jury's verdict will be advisory rather than binding; the judge will make the final determination on liability.
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If OpenAI is found liable, a second phase beginning on 18 May will address remedies.
The outcome could set a precedent for how the law treats nonprofit-to-for-profit conversions across the technology sector, though OpenAI remains the only major AI company to have attempted the manoeuvre.
