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Day three, and the plot thickens
Elon Musk went into federal court in Oakland swinging, accusing OpenAI of betraying its charitable roots. Then came the awkward part: under cross-examination, he admitted xAI had “partly” distilled OpenAI models to help build Grok. That’s the kind of courtroom moment that makes everyone in the room do the silent blink.
Why Microsoft is stuck in the splash zone
Microsoft isn’t the headline star here, but it’s absolutely in the blast radius. Musk’s lawsuit names Microsoft as a defendant, and his team argues the company helped prop up OpenAI’s alleged mission drift through its huge investment and cloud partnership. If the case ends with OpenAI forced to unwind its for-profit conversion, Microsoft’s AI roadmap could get a lot bumpier.
The real stakes are bigger than one spicy quote
This isn’t just a celebrity-tech feud with extra drama. Investors are watching for three things:
- whether OpenAI’s corporate structure survives intact
- whether an IPO gets delayed or derailed
- whether Microsoft’s OpenAI-powered product stack suddenly has to deal with more uncertainty than it bargained for
Prediction markets are basically shrugging at Musk
Polymarket traders currently have Musk at just 42% to win, while Kalshi puts him at 55% on its version of the bet. Translation: the market thinks this is far from a slam dunk, even if Musk sounds very convinced of his own ending.
Judge Yvonne Gonzalez Rogers also shut down Musk’s attempt to bring in AI extinction-risk testimony, and even took a little jab at the billionaire’s worldview. So yes, the trial has everything: big money, bigger egos, and enough legal fireworks to keep the tech crowd glued to the docket.
Big picture: If OpenAI’s structure gets forced into a reset, Microsoft may have to rethink how tightly it’s tied to the hottest AI engine on the block. That’s not a small headache — that’s a strategic migraine.