California faces pressure to wade into Elon Musk-Sam Altman row (2025)

Musk and Bonta would make even stranger bedfellows. The top state lawyer has increasingly become the face of California’s Trump resistance, suing the administration over the Musk-led DOGE effort to fire thousands of federal workers and choke off federal funding to California and other states. Meanwhile, Bonta is also defending the state’s social media laws against Musk’s legal challenges.

A coalition of nonprofit leaders sent a letter to Bonta’s office on Wednesday, including from the San Francisco Foundation and Economic Security Project, as well as labor groups, calling on the AG to “take action to transfer OpenAI’s charitable assets to a truly independent nonprofit or nonprofits.”

“This isn’t about trying to stop the conversion of nonprofit to for-profit,” Fred Blackwell, the CEO of the San Francisco Foundation, told POLITICO’s California Decoded newsletter. “It’s really purely about making sure the assets that were accumulated for the public good stay that way.”

The group points to the state attorney general’s office intervening in the 1990s when nonprofit health companies like The California Wellness Foundation (a petition signatory) were established through a transfer of charitable assets.

“Similarly, it is imperative that the Attorney General demand the distribution of OpenAI, Inc.’s charitable assets to independent nonprofit entities that will use these assets for public benefit,” the petition said.

Blackwell’s group sent a letter to Bonta’s office in January to that effect before filing the longer detailed petition, where they characterize potentially the entirety of OpenAI’s latest $300 billion valuation as charitable assets.

“Our Board has been very clear⁠ that we intend to strengthen the non-profit so that it can deliver on its mission for the long term. We’re not selling it, we’re doubling down on its work,” an OpenAI spokesperson said in a statement.

The company previously told POLITICO it plans to make its nonprofit parent company a shareholder in the new for-profit enterprise, and to appoint a committee to oversee and distribute the assets that flow into it.

OpenAI met with the petitioners before they filed their petition Wednesday and offered to have their respective legal teams meet, according to an email seen by POLITICO, and a person with knowledge of the situation who was not authorized to discuss it publicly.

Bonta’s office said in an emailed statement that the California “Department of Justice is committed to protecting charitable assets for their intended purpose.”

His office declined to comment on any ongoing investigations, but referenced its letter to OpenAI requesting restructuring plans and the value of its charitable assets.

OpenAI countersued Musk in a California court on Wednesday, directly disputing his claims and accusing him of intentionally trying to hamstring OpenAI as he builds his own competitor, xAI.

“Elon’s nonstop actions against us are just bad-faith tactics to slow down OpenAI and seize control of the leading AI innovations for his personal benefit,” the company wrote on X, the site Musk owns.

The Delaware attorney general’s office has said it is in conversation with OpenAI and is reviewing the matter.

Musk’s attorneys have tried to bring Bonta into the case he filed against OpenAI on public interest grounds, but so far the attorney general has declined, said Rose Chan Loui, a nonprofit law expert at UCLA.

Bonta “is trying to get out of the federal case mostly on the argument that they can’t be dragged into federal court,” she said. But “Elon Musk has filed a brief saying that we’re not dragging you in as a defendant, we’re dragging you as a matter that concerns you.”

At stake is not just the open question of how much of the company’s $300 billion valuation should be conserved as nonprofit assets, Loui said. The company in raising its latest $40 billion funding round agreed to return half that amount if it does not make the change to a for-profit this year.

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