Musk's Fraud Claims Against OpenAI, Microsoft Proceed

A California federal judge has ruled that Elon Musk can proceed with his fraud and unjust enrichment claims against OpenAI and its major investor Microsoft, while dismissing other allegations such as racketeering, false advertising, and breach of fiduciary duty. Musk contends that OpenAI, which he co-founded as a nonprofit, violated its founding mission by shifting toward a for-profit model to benefit insiders. The court found Musk plausibly alleged an implied contract based on communications and conduct, despite no formal written agreement. The judge noted that contemporaneous emails and actions may support Musk's claim that OpenAI and its founders agreed to maintain nonprofit status. While OpenAI and Microsoft will face litigation on these core claims, Musk is permitted to amend his racketeering allegation. The case unfolds as OpenAI faces broader criticism from former employees and AI experts regarding its departure from nonprofit principles.