OpenAI Faces Lawsuit Despite Staying Non-Profit Amid $3 Billion Windsurf Deal

OpenAI has been the leader of the generative artificial intelligence (GenAI) sector since the launch of its first chatbot—ChatGPT—way back in November 2022.

Yet, the nonprofit company hasn’t been short of controversies, especially not when its GPT-4.5 officially passed the Turing test, or when it decided to transition to a for-profit business, an announcement that came when the company was mid-controversy—key leaders were leaving.

The plan wasn’t met with optimism from everyone—least of all early OpenAI co-founder, Elon Musk, who sued OpenAI for planning to switch its business model and even requested a preliminary injunction to pause OpenAI’s transition until the trial’s final decision is reached. This was rejected by the court.

OpenAI welcomed the decision and hit back at Musk, saying, “This lawsuit has always been about what’s good for Elon and his own for-profit AI company. The truth is, he wanted to merge a for-profit OpenAI into Tesla.”

At the same time, the court agreed to fast-track the trial in the autumn, with both parties on board.

However, the legal back-and-forth may not have much ground to go on, as OpenAI provided a major update regarding its structure.

“OpenAI was founded as a nonprofit, and is today overseen and controlled by that nonprofit. Going forward, it will continue to be overseen and controlled by that nonprofit,” reads the company’s blog post providing the update.

Instead, the for-profit division, which has been under the nonprofit since 2019, will transition to a Public Benefit Corporation (PBC), building on OpenAI’s initial and primary mission.

The mission—should OpenAI choose to retain it—is to ensure that artificial general intelligence (AGI) benefits all of humanity.

The nonprofit will control and support the PBC while remaining a large shareholder.

“We made the decision for the nonprofit to retain control of OpenAI after hearing from civic leaders and engaging in constructive dialogue with the offices of the Attorney General of Delaware and the Attorney General of California,” read the blog post.

Despite the pivot, Elon Musk isn’t giving up his lawsuit, according to his lawyer. Currently, the jury trial has been scheduled for March 2026.

The blog post was accompanied by a letter CEO Sam Altman wrote to the company’s employees and shareholders.

For the most part, the letter reiterated OpenAI’s humble beginnings, its undying mission to democratize artificial intelligence (AI), and addressed how its for-profit plans are a cause for concern.

“We believe this is the best path forward—AGI should enable all of humanity to benefit each other. We realize some people have very different opinions.”

When talking about how the company plans to evolve its structure, Sam Altman listed three things it wants to accomplish: It wants to operate and get resources in a way that makes its services available to all, which could take hundreds of billions of dollars; It wants its nonprofit to be the largest and most effective nonprofit in history; and it wants to deliver safe and beneficial AGI.

“OpenAI was founded as a nonprofit, is today a nonprofit that oversees and controls the for-profit, and going forward will remain a nonprofit that oversees and controls the for-profit. That will not change,” promises Sam.

Interestingly, if OpenAI transitions by the end of 2025, it is expected to secure $40 billion in funding—led by SoftBank—failing which, the investment could be revised to $20 billion.


All of this comes as OpenAI is reported to have made yet another acquisition—this time, it’s Windsurf—the world's most advanced AI coding assistant for developers and enterprises—for about $3 billion, according to people familiar with the matter.

Formerly known as Codeium, Windsurf was in talks to raise funding at a valuation of $3 billion, following a $150 million raise in August 2024, which valued it at $1.25 billion.

As per reports, the deal hasn’t closed yet, and neither OpenAI nor Windsurf has responded to requests for comment.

Should the deal be finalized for the rumored amount, it would mark OpenAI’s largest acquisition to date.

Do you think OpenAI made the right decision in retaining its nonprofit status? Do you think Elon Musk is right in his pursuit of OpenAI’s initially planned transition?

Let us know in the comments below!