Musk vs. Altman Court Battle, Week One: xAI Admits to Using OpenAI Models and AI Doomsday Warning

Musk vs. Altman Trial: The Biggest Legal Battle in the AI Industry Begins

On May 1, 2026, the federal courthouse in Oakland, California, became the epicenter of the tech world’s attention. The first week of a groundbreaking trial between Elon Musk, the founder of Tesla and SpaceX, and Sam Altman, the CEO of OpenAI and a key figure in the generative AI boom, commenced.

The courtroom opened with Musk dressed in a black suit and tie. Addressing the jury, Musk claimed he had funded OpenAI’s founding to support nonprofit AI development, only to be “deceived into providing free funding to launch a startup.”

”I Was a Fool”: Musk’s Admission and the $38 Million Investment

Musk’s testimony was filled with regret and self-reproach. “I was a fool. I gave them free money to start a company,” Musk told the jury. According to him, when he co-founded OpenAI in 2015 alongside Altman and Greg Brockman, the organization was intended to be a nonprofit focused on developing AI for the benefit of humanity as a counterbalance to Google.

Musk revealed that he had provided an investment of $38 million, which he described as “essentially free funding.” He emphasized that this funding laid the groundwork for what has now grown into a company valued at an estimated $800 billion. The trial’s central issue revolves around whether it was lawful for this nonprofit organization to be restructured into its current profit-driven model.

Warning of Human Extinction and a “Terminator” Scenario

Musk also positioned himself as a longtime advocate for AI safety. He explained that he co-founded OpenAI to counter Google’s dominance in AI development. Musk revealed a past conversation with Google co-founder Larry Page, in which he asked, “What if AI tries to wipe out humanity?” According to Musk, Page responded, “If AI survives, that’s fine.”

“The worst-case scenario is a ‘Terminator’-style situation where AI kills us all,” Musk warned the jury. On the other hand, OpenAI’s attorney, William Savitt, countered that Musk’s lawsuit is not about safety or regulation but rather an attempt to weaken a competitor to his own ventures.

Stunning Admission: xAI Used Distilled OpenAI Models

The most shocking moment of the trial came when Musk admitted that his own AI company, xAI—known for its chatbot “Grok”—had used OpenAI’s models through a process called distillation to train its own systems. The revelation caused an audible stir in the courtroom.

Distillation is a machine learning technique where an existing large AI model’s outputs are used as training data to create smaller and more efficient models. Musk’s admission that xAI, despite his critique of OpenAI’s for-profit status, had leveraged its competitor’s technology for its own development adds a layer of complexity to the trial.

Outcome of the Trial Could Impact IPOs and Valuations

Musk’s demands are clear: to remove Altman and Brockman from their positions and revert OpenAI to its original nonprofit structure. The court’s decision could disrupt OpenAI’s plans for an initial public offering (IPO), which is reportedly approaching a valuation of $1 trillion.

Meanwhile, Musk’s own AI company, xAI, is expected to go public as early as June, with a target valuation of $1.75 trillion. The trial highlights the intersection of AI safety, corporate ethics, and staggering financial stakes, striking at the heart of the modern tech industry.

Outside the courthouse, protesters held signs reading “Stop ChatGPT” and “Boycott Tesla,” underscoring that this trial is not just a legal battle but a focal point of public debate. The central question—who should control the future of AI and how—remains unanswered, but the court’s ruling is expected to have far-reaching implications for the industry as a whole.