Author: Deep Tide TechFlow

On April 28, in the federal court in Oakland, California.

Musk took the witness stand and was questioned by lawyers for nearly two hours. He spoke from his childhood in South Africa to the founding of SpaceX, from "The Terminator" to "Star Trek," trying to convince the nine jurors that everything he has done in his life was to save humanity.

Then he said, "If the verdict is that it's okay to plunder charities, American charitable donations will be destroyed."

On the surface, this case is a personal feud between two tech billionaires. Musk demands the removal of Altman, the restoration of OpenAI's nonprofit nature, seeks $134 billion in damages, and states that all damages will go to OpenAI's charitable entity.

OpenAI's lawyer Bill Savitt opened with another version: "We are here because Mr. Musk did not get what he wanted at OpenAI. He withdrew, claiming they would surely fail. But my clients have the courage to succeed without him."

Two narratives, each with its own script. But what really needs to be dismantled is not who is lying.

$38 million nuclear button

Between 2016 and 2020, Musk donated approximately $38 million to $44 million to OpenAI. Using the highest figure, this accounts for about 0.005% of OpenAI's current valuation of $852 billion.

With this money, he is now qualified to demand that the court dismantle the structure of a trillion-dollar company, remove the CEO and president, terminate the partnership with Microsoft, and recover hundreds of billions of dollars in "unjust enrichment."

This could not happen in the normal business world. You only bought 0.005% of a company's shares, and you couldn't even enter the shareholder meeting. But OpenAI's starting point is 501(c)(3), which is a tax-exempt charity under U.S. tax law. Musk's money is a donation, enjoying tax deductions, and thus obtaining a legal recourse for donors regarding mission deviations of charitable organizations.

Many people think a donation is just giving money. But under U.S. charitable trust law, if you can prove that the organization deviates from its founding mission, the donor has recourse. The amount does not affect this right.

In other words, the $38 million bought Musk not equity, but a nuclear button.

And this button was pressed at the most critical moment for OpenAI. OpenAI had just completed a $122 billion financing round, with a valuation of $852 billion, and was preparing for an IPO in the fourth quarter of this year. Kalshi's prediction platform indicated a 47% chance of Musk winning.

In fact, the biggest risk for OpenAI is the historically inherited company structure. It has grown a trillion-dollar body but is wrapped in a 501(c)(3) cloak. This cloak could be torn away at any moment, and the person pulling it could need to pay very little.

Silicon Valley's open secret

OpenAI is not the only AI lab walking the tightrope between "nonprofit mission" and "commercial ambition."

This model has a template in Silicon Valley. First, establish a nonprofit to attract top talent and early funding under the banner of "benefiting humanity," and when it's time to burn cash, embed a for-profit subsidiary. The nonprofit shell retains the mission narrative, while the for-profit entity handles profit-making and financing.

Mozilla has done this, and OpenAI is no exception. Established as a nonprofit in 2015, it created a for-profit subsidiary in 2019, and then split into a public-benefit corporation (PBC) in 2025, changing and merging all along the way.

Anthropic took a different path. It registered as a public-benefit corporation in Delaware from the beginning, directly following the commercial entity route, but added a governance body called the "Long-Term Benefits Trust" (LTBT) to constrain corporate behavior. The co-founders of Anthropic likely saw the governance dilemma of OpenAI and chose a structure that had no nonprofit burden from the start.

But the key question is, who do these structures constrain?

OpenAI's nonprofit board attempted to dismiss Altman in November 2023. That "palace coup" lasted less than a week, and Altman returned with Microsoft's support, while the directors who dismissed him were purged. The nonprofit governance structure was crushed by commercial power at the moment it was truly needed.

The lesson for OpenAI is that the nonprofit structure is a shield in the early stages, a decoration in the mid-term, and a loophole in the later stages. It neither protects the founding mission nor offers an effective defense against external attackers.

The real chess game outside the courtroom

Having discussed structural issues, let’s return to the people.

Musk compares himself to a savior of humanity in court. But look at the current state of his AI company xAI.

Founded in 2023, it reached a valuation of $230 billion by 2025. The speed is astonishing. But by early 2026, things started to change. SpaceX acquired xAI in February, followed by mass layoffs and restructuring. Co-founders left one by one. By the end of March, out of 11 co-founders, only Musk remained. In April, the CFO left, and SpaceX's vice president of Starlink was parachuted in to take over as xAI president.

After SpaceX took over, xAI basically became a department, not an independent company. The reason the founders left is simple: they joined an AI lab, not a subsidiary of SpaceX.

What about the enterprise side? Grok claims to have 64 million monthly active users, but that is because it is embedded in the X interface, counting users who open X. The revenue from pilot projects with Morgan Stanley and Palantir is at the "hundreds of thousands to millions of dollars" level. xAI's independent annual revenue (excluding X's advertising and subscriptions) is about $500 million by the end of 2025.

Meanwhile, OpenAI's monthly revenue reached $2 billion in March 2026.

Musk, holding a nearly-vanished founding team, with corporate revenue close to zero and an AI company absorbed by SpaceX, stands in court demanding the dismantling of the world's largest AI company.

He claims this is for humanity. OpenAI's lawyer says this is because xAI cannot compete with OpenAI, so Musk wants to use legal means to do what he cannot achieve commercially.

What’s the real reason? Looking at the timeline, it becomes clear. Musk filed the lawsuit in 2024, shortly after xAI was established. In 2025, xAI frantically raised funds, attempting to catch up with OpenAI in technology and scale. By 2026, xAI was collapsing internally, and around the same time, this lawsuit finally went to court.

Perhaps if xAI could technically compete with OpenAI, Musk might never have reached the courtroom. A lawsuit is Plan B after failing in business competition.

The ruins of the winners

Now let's take a panoramic view.

This lawsuit is expected to last three to four weeks. Judge Yvonne Gonzalez Rogers (the one who presided over the Epic vs. Apple case) will make a ruling based on the jury's recommendations, expected in mid-May.

Most legal analysts believe the most likely outcome is a mixed verdict. The court may find that OpenAI violated its fiduciary duty to donors in some aspects, but is unlikely to fully overturn the for-profit structure or remove management. Regardless of who wins or loses, the losing party will appeal to the Ninth Circuit Court, and the case may drag into 2027.

But regardless of the outcome, this lawsuit has already changed several things.

For OpenAI, it exposed a weakness. The highest-valued private tech company in the world has its legal structure potentially uprooted by a small donation made ten years ago. This risk must be disclosed in their IPO prospectus, and every future investor will ask if there are other historical donors who might emerge?

a16z co-founder Marc Andreessen said, "Regardless of the outcome, it sets a governance template for all future cutting-edge AI labs. The path of starting nonprofit and transitioning midway needs to be reassessed from today onwards."

For Musk himself, he told a story about saving humanity while standing in court. But his own AI company is being hollowed out, with the founding team gone, absorbed by SpaceX and turned into a department. He is using a lawsuit to cover a building that is collapsing.

And Altman left the courtroom before Musk testified.

Who is more anxious, who is performing, perhaps the court records will provide the answer. By the Ninth Circuit's appeal window in 2027, perhaps that will be the moment when this high-stakes gamble truly reveals its cards.