Sam Altman faces scrutiny over OpenAI governance in court

On Tuesday, OpenAI CEO Sam Altman testified in a California federal court. The legal proceedings, presided over by Federal Judge Yvonne Gonzalez Rogers, are examining whether OpenAI’s non-profit board maintains actual control over its for-profit business. Plaintiff Elon Musk is leading the legal effort to shut down the company’s for-profit operations. Musk’s lawyers argue that Altman’s influence over OpenAI exceeded that of its board of directors. The trial brings renewed scrutiny to the governance structure of the artificial intelligence firm, specifically focusing on the power dynamics between its non-profit oversight body and its commercial arm.

The testimony focused heavily on Altman’s financial disclosures and past statements. In May 2023, Altman testified before Congress regarding AI regulation, where he claimed he had no equity in OpenAI. However, the court examined his economic exposure to OpenAI through his LP position—meaning a Limited Partner, or an investor in a fund—in a Y Combinator fund. Steve Molo, the attorney leading the legal effort against OpenAI, questioned Altman on whether he had disclosed this interest to the United States Senate, following earlier questioning by US Senator John Kennedy. Altman responded that he did not mention it in that testimony, but believed it is well understood what it means to be a passive owner of venture funds. This discrepancy led to intense questioning, as plaintiffs highlighted instances where others accused Altman of lying or misleading them.

During the proceedings, attorneys for the plaintiffs highlighted allegations of a toxic culture of lying within the organization, a phrase used by former OpenAI board member McCauley. Meanwhile, OpenAI’s defense dismissed these claims as character assassination and maintained that the board retains oversight. Witnesses brought by OpenAI and Microsoft reported that the non-profit board exercises control over the for-profit entity, ensuring it remains a going concern—a business that is operating and solvent. However, Microsoft CEO Satya Nadella had previously described the board’s actions during Altman’s brief departure as amateur city. The court is also examining the period since 2024, the year Zico Kolter started on the board. When questioned about his own credibility, Altman defended his record. “I believe I am an honest and trustworthy businessperson,” said Altman, the OpenAI CEO.

Why it matters

The trial examines whether OpenAI’s non-profit board maintains actual control over its for-profit business, a central question in Elon Musk’s legal effort to shut down the company’s for-profit operations.