There was a time when Elon Musk and Sam Altman were friends. But the two tech billionaires are now embroiled in a bitter legal battle in the United States that could reshape not just OpenAI, the artificial intelligence (AI) firm behind ChatGPT they cofounded in 2015, but also the future of the technology more broadly.

Launched by Musk in 2024, the lawsuit is the culmination of a years-long feud that centres on the evolution of OpenAI from a non-profit to a for-profit enterprise.

The trial, which kicked off this week in California, is expected to last roughly three weeks. But its ripple effects could be felt for many years to come.

The case and the cast

The lawsuit pits Musk against Altman, OpenAI president Greg Brockman, OpenAI itself, and Microsoft, the AI firm’s largest backer.

Musk cofounded and helped fund OpenAI to the tune of about US$44 million. By his own account from the witness stand this week, he “came up with the idea, the name, recruited the key people, taught them everything I know, provided all of the initial funding”.

Brockman served as technical cofounder; Altman became chief executive in 2019. Their alliance with Musk fractured as the organisation grew. Musk departed the board in 2018. He says he was pushed out.

However, OpenAI says he walked when denied majority control. Musk subsequently launched his own rival AI venture, xAI, which is now part of SpaceX.

What Musk is alleging

As part of the lawsuit, Musk is alleging breach of contract, breach of fiduciary duty, false advertising and unfair business practices.

His core claim is that Altman and Brockman induced him to donate on the understanding that any artificial general intelligence – or AGI – built at OpenAI would stay “open” and shared with humanity.

Instead, Musk argues, the founders turned the charity into a “wealth machine”. They did this in two stages. First, via a 2019 capped-profit subsidiary. Here, OpenAI’s for-profit unit limited the returns, with the excess handed back to the nonprofit. Second, through a full restructure into a public benefit corporation, which is now valued at roughly US$852 billion.

Musk’s lawyers told jurors Altman and Brockman “stole a charity, full stop”. Outside court, Musk has been throwing insults at his opponents, prompting the judge to threaten a gag order.

OpenAI flatly rejects Musk’s narrative. As its lead counsel, William Savitt, told jurors:

We are here because Mr Musk didn’t get his way with OpenAI.

The company alleges, as described in two pre-trial blog posts, that Musk himself proposed merging OpenAI with Tesla in 2017 and walked away when denied majority control.

The lawsuit, OpenAI says, is “motivated by jealousy” and designed to damage a competitor.

A company under pressure

The trial arrives at a precarious moment for OpenAI.

The New Yorker magazine recently published an investigation describing Altman as a “pathological liar”. The investigation drew on an internal dossier compiled by OpenAI’s former chief scientist Ilya Sutskever which alleged a “consistent pattern of lying” to the company’s board.

Altman called the piece “incendiary” but acknowledged “a bunch of mistakes”. Musk has been amplifying the article to his X followers throughout the trial.

Financially, OpenAI is bleeding.

Internal projections point to roughly US$14 billion in losses for 2026 alone, with cumulative losses expected to top US$44 billion before any profit materialises.

Shortly before the trial began, OpenAI quietly shut down Sora, its flagship video-generation model.

Before closing, it burned around US$1 million a day in computing costs. The closure took down a US$1 billion Disney partnership with it.

Even a fresh US$122 billion fundraise from Amazon, Nvidia and SoftBank has not eased the pressure.

What Musk wants

Musk wants the jury to unwind OpenAI’s for-profit conversion, remove Altman from the nonprofit board, and strip both Altman and Brockman of their roles in the for-profit entity.

He is also demanding US$130 billion in damages from OpenAI – for what his team calls “ill-gotten gains”.

He has accused Microsoft of “aiding and abetting” and argues it is liable for a share.

His legal team argues OpenAI’s existing models already constitute AGI, because they have surpassed human intelligence in many tasks. Under the founding agreement, AGI could not be commercially licensed. This would include the licence currently used by Microsoft for CoPilot.

What’s at stake

If Musk wins, the consequences would be significant.

OpenAI’s planned initial public offering would almost certainly be derailed. This is expected in late 2026 at a US$1 trillion valuation. Investors in the recent funding round could face clawbacks.

Altman, the public face of the AI boom, could be removed from the company he has led since 2019. The broader question of whether AI labs founded as charities can lawfully pivot into commercial enterprises would be settled, at least in California. This has potential implications for Anthropic and other mission-driven peers.

Even a defeat for Musk would not end the controversy.

The trial has already pried open Silicon Valley’s normally sealed boardrooms, surfacing diaries, Slack threads and HR memos that paint an unflattering portrait of OpenAI’s governance.

The case crystallises a wider public anxiety: an incredibly powerful technology is being built and controlled by a tiny number of feuding tech bros. And it’s the rest of us who have to live with the consequences.

Rob Nicholls is a part of the University of Sydney Centre for AI, Trust, and Governance and receives funding from the Australian Research Council.

Australia’s inflation rate surged 1.1% in March, driven by a record jump in fuel prices, making an interest rate hike next Tuesday more likely.

The consumer price index (CPI), released today, rose to 4.6% in the year to March, the first major economic indicator to show the impact of the war in the Middle East.

A measure of underlying inflation – the annual “trimmed mean” – came in at 3.3%. This measure is closely watched by the Reserve Bank of Australia (RBA) and is also above its 2–3% target band.

For the RBA, which meets next week to decide on interest rates, the message is clear: inflation is moving in the wrong direction again, and quickly.

This is not a normal inflation shock. It is being driven by a sharp rise in global energy prices following the war in the Middle East.

Higher interest rates will not bring down global oil prices. But they can help prevent a fuel shock from becoming a broader and more persistent inflation problem.

Fuel prices are just the beginning

The immediate driver of the March inflation surge is fuel.

Global oil prices have risen sharply, pushing up petrol and diesel prices at the pump.

The Australian Bureau of Statistics said fuel prices jumped 32.8% in March – “the largest monthly increase since the series began in 2017”.

This feeds directly into CPI, making it one of the fastest channels through which global shocks affect domestic inflation.

But fuel is only the first-round effect. The bigger concern is what comes next. Higher fuel costs raise transport costs across the economy. Businesses then face a choice: absorb the increase, or pass it on to consumers.

Some will try to absorb it at first, especially if consumers are already cutting back. But margins cannot be squeezed indefinitely. Over time, more of these costs are likely to be passed on in the form of fuel surcharges and show up in final prices.

This is how a temporary shock can turn into persistent inflation.

Higher costs for businesses

The March CPI largely captures the initial impact of the oil shock. The second-round effects – where higher costs spread more broadly – take time.

These effects are already beginning to appear. Businesses are facing higher operating costs, not just from fuel but also from supply disruptions and rising input prices. As these pressures build, price rises can spread beyond petrol and transport.

Even if oil prices stabilise, the earlier jump in fuel costs will continue to flow through the economy. Transport costs affect food, retail, construction and many services. Airlines, delivery firms, supermarkets and builders all face higher costs when fuel prices rise.

That means inflation could remain elevated for some time, even if the initial shock fades.

A broader view of inflation

While the monthly CPI attracts attention, the RBA still places weight on the quarterly CPI.

The March quarter figures give the RBA a broader read on inflation than the monthly data. Annual inflation in the March quarter was 4.1%, while annual trimmed mean inflation was 3.5%.

The quarterly figures show inflation has been building even before the February 28 start of the war in Iran. It points to broader price pressures, making the case for a rate rise stronger.

The economy also takes a hit

The fuel shock is not only an inflation problem. It is also a growth problem.

Higher petrol prices reduce household purchasing power, leaving less money for discretionary spending. That weighs on retailers, restaurants, travel businesses and other parts of the economy that depend on consumer spending.

For businesses, higher fuel and transport costs raise production costs. Some may delay hiring or investment. Others may lift prices and risk losing customers.

This is the difficult part for the RBA. A fuel shock pushes inflation up while also weighing on economic activity. This creates a risk of stagflation, when inflation stays high even as growth slows. That makes the RBA’s policy decision much harder.

But if business and consumer expectations about future inflation start to rise, the damage could last well beyond the current shock.

If businesses expect costs to keep rising, they are more likely to raise prices. If workers expect inflation to stay high, they are more likely to seek larger wage increases. This can turn a one-off shock into a more persistent problem.

The RBA will want to avoid that. That is why the bank is likely to act at its May 4-5 meeting.

Why a rate rise now?

The case for a third rate rise (following three cuts last year) is not that the RBA can reverse the fuel shock. It cannot.

The case is that inflation was already too high before the latest shock, and today’s CPI figures suggest the return to its 2–3% target will take longer than expected.

Market pricing already points in the same direction. The ASX RBA Rate Tracker shows that, as of April 28, markets were pricing a 76% chance of a rate rise to 4.35% next week.

Today’s CPI figures make that pricing look more justified. A rate rise would signal that the RBA remains committed to bringing inflation back to target.

We’re at a turning point

The March CPI release marks a turning point.

It shows how quickly global shocks can feed into domestic inflation, and how difficult they are to contain once they begin to spread.

Fuel prices have lit the spark. The risk now is that the fire spreads through the broader economy. That is why the RBA is likely to raise interest rates next week.

Stella Huangfu does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.