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Elon Musk is asking a federal court to stop OpenAI from converting into a fully for-profit business.

Attorneys representing Musk, his AI startup xAI, and former OpenAI board member Shivon Zilis filed for a preliminary injunction against OpenAI on Friday. The injunction would also stop OpenAI from allegedly requiring its investors to refrain from funding competitors, including xAI and others.

The latest court filings represent an escalation in the legal feud between Musk, OpenAI and its CEO Sam Altman, as well as other long-involved parties and backers including tech investor Reid Hoffman and Microsoft.

Musk had originally sued OpenAI in March 2024 in a San Francisco state court, before withdrawing that complaint and refiling several months later in federal court. Attorneys for Musk in the federal suit, led by Marc Toberoff in Los Angeles, argued in their complaint that OpenAI has violated federal racketeering, or RICO, laws.

In mid-November, they expanded their complaint to include allegations that Microsoft and OpenAI had violated antitrust laws when the Chat GPT-maker allegedly asked investors to agree to not invest in rival companies, including Musk’s newest startup, xAI.

Microsoft declined to comment.

 In their motion for preliminary injunction, attorneys for Musk argue that OpenAI should be prohibited from “benefitting from wrongfully obtained competitively sensitive information or coordination via the Microsoft-OpenAI board interlocks.”

“Elon’s fourth attempt, which again recycles the same baseless complaints, continues to be utterly without merit,” an OpenAI spokesperson said in a statement.

OpenAI has emerged as one of the biggest startups in recent years, with ChatGPT becoming a major hit that has helped usher massive corporate enthusiasm over AI and related large language models.

Since Musk announced xAI’s debut in July 2023, his newer AI business has released its Grok chatbot and is raising up to $6 billion at a $50 billion valuation, in part to buy 100,000 Nvidia chips, CNBC reported earlier this month.

“Microsoft and OpenAI now seek to cement this dominance by cutting off competitors’ access to investment capital (a group boycott), while continuing to benefit from years’ worth of shared competitively sensitive information during generative AI’s formative years,” the lawyers wrote in the filing.

The attorneys wrote that the terms OpenAI asked investors to agree to amounted to a “group boycott” that “blocks xAI’s access to essential investment capital.”

The lawyers later added that OpenAI “cannot lumber about the marketplace as a Frankenstein, stitched together from whichever corporate forms serve the pecuniary interests of Microsoft.”

In July, Microsoft gave up its observer seat on OpenAI’s board, although CNBC reported that the Federal Trade Commission would continue to monitor the influence of two companies over the AI industry.

FTC Chair Linda Khan announced at the beginning of the year that the federal agency would initiate a “market inquiry into the investments and partnerships being formed between AI developers and major cloud service providers.” Some of the companies that the FTC mentioned as part of the study included OpenAI, Amazon, Alphabet, Microsoft and Anthropic.

In the filing, attorneys for Musk also argue that OpenAI should be prohibited from “benefitting from wrongfully obtained competitively sensitive information or coordination via the Microsoft-OpenAI board interlocks.”

OpenAI originally debuted in 2015 as a non-profit and then in 2019, converted into a so-called capped-profit model, in which the OpenAI non-profit was the governing entity for its for-profit subsidiary. It’s in the process of being converted into a fully for-profit public benefit corporation that could make it more attractive to investors. The restructuring plan would also allow OpenAI to retain its non-profit status as a separate entity, CNBC previously reported.

Microsoft has invested nearly $14 billion in OpenAI but revealed in October as part of its fiscal first-quarter earnings report that it would record a $1.5 billion loss in the current period largely due to an expected loss from OpenAI.

In October, OpenAI closed a major funding round that valued the startup at $157 billion. Thrive Capital led the financing while investors, including Microsoft and Nvidia, also participated.

OpenAI has faced increasing competition from startups such as xAI, Anthropic and tech giants such as Google. The generative AI market is predicted to top $1 trillion in revenue within a decade, and business spending on generative AI surged 500% this year, according to recent data from Menlo Ventures.

CNBC reached out to attorneys for Musk on Saturday. They did not respond to requests for comment.

— CNBC’s Hayden Field contributed reporting

Watch: Elon Musk emerges as a key voice in Trump’s tech policy.

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Tesla shares climb as Musk pledges to be ‘super focused’ on companies ahead of Starship launch

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Tesla shares climb as Musk pledges to be 'super focused' on companies ahead of Starship launch

Elon Musk listens as reporters ask U.S. President Donald Trump and South Africa President Cyril Ramaphosa questions during a press availability in the Oval Office at the White House on May 21, 2025 in Washington, DC.

Chip Somodevilla | Getty Images

Tesla shares gained about 5% on Tuesday after CEO Elon Musk over the weekend reiterated his intent to home in on his businesses ahead of the latest SpaceX rocket launch.

The billionaire wrote in a post to his social media platform X that he needs to be “super focused” on X, artificial intelligence company xAI and Tesla as they launch “critical technologies” on the heels of a temporary outage.

“As evidenced by the uptime issues this week, major operational improvements need to be made,” he wrote, adding that he would return to “spending 24/7” at work. “The failover redundancy should have worked, but did not.”

An outage over the weekend briefly shuttered the social media platform formerly known as Twitter for thousands of users, according to DownDetector. Earlier in the week, the platform suffered a data center outage. X has suffered a series of outages since Musk purchased the platform in 2022.

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Musk has previously indicated plans to step away from his political work and prioritize his businesses.

During Tesla’s April earnings call he said that he would “significantly” reduce his time running President Donald Trump‘s Department of Government Efficiency.

In the last election cycle, Musk devoted time and billions of dollars to political causes and toward electing Trump in 2024. However, a story over the weekend from the Washington Post, citing sources familiar with the matter, said that Musk has grown disillusioned with politics and wants to return to managing his businesses.

Last week, Musk said in an interview at the Qatar Economic Forum that he planned to spend “a lot less” on campaign donations going forward.

The comments from Musk precede SpaceX’s Starship rocket Tuesday evening. Pressure is on for the company after two Starship rockets exploded in January and March.

Ahead of the launch, Musk announced an all hands livestream on X at 1 p.m.

Tesla is still facing fallout from Musk’s political foray, with protests at showrooms and other brand damage.

In April, Tesla sold 7,261 cars in Europe, down 49% from last year, according to the European Automobile Manufacturers’ Association.

WATCH: Elon Musk: We have seen a major rebound in demand

Elon Musk: We have seen a major rebound in demand

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Trump advisor Hassett says ‘we don’t want to harm’ Apple with iPhone tariffs

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Trump advisor Hassett says 'we don't want to harm' Apple with iPhone tariffs

NEC Director Kevin Hassett on Trump's iPhone tariff threat: In the end, we don't want to harm Apple

National Economic Council Director Kevin Hassett said Tuesday that the Trump administration does not want to “harm Apple” with tariffs.

“Everybody is trying to make it seem like it’s a catastrophe if there’s a tiny little tariff on them right now, to try to negotiate down the tariffs,” Hassett told CNBC’s “Squawk Box” on Tuesday. “In the end, we’ll see what happens, we’ll see what the update is, but we don’t want to harm Apple.”

Hassett’s comments come after President Donald Trump said in a social media post that Apple will have to pay a tariff of 25% or more for iPhones made outside the U.S. Apple has historically manufactured its products in foreign countries including China, India and Vietnam.

“I have long ago informed Tim Cook of Apple that I expect their iPhone’s that will be sold in the United States of America will be manufactured and built in the United States, not India, or anyplace else,” Trump wrote in the post. “If that is not the case, a Tariff of at least 25% must be paid by Apple to the U.S. Thank your for your attention to this matter!”

By some estimates, a U.S.-made iPhone could cost as much as $3,500.

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“If you think that Apple has a factory some place that’s got a set number of iPhones that it produces and it needs to sell them no matter what, then Apple will bear those tariffs, not consumers, because it’s an elastic supply,” Hassett said.

Hasset’s comments continue the administration’s push to pressure companies to shoulder the cost burden of Trump’s tariffs, instead of raising prices for consumers.

Earlier this month, Trump told retail giant Walmart to “EAT THE TARIFFS” after the company warned it would have to pass those added costs on.

Shares of Apple were up more than 1% Tuesday.

Apple did not immediately respond to CNBC’s request for comment.

WATCH: NEC Director Kevin Hassett on Trump’s iPhone tariff threat: In the end, we don’t want to harm Apple

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Ambience announces OpenAI-powered medical coding model that outperforms physicians

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Ambience announces OpenAI-powered medical coding model that outperforms physicians

Dr. Priti Patel, CMIO at John Muir Health, uses Ambience before starting a patient encounter.

Courtesy of Ambience Healthcare

Artificial intelligence startup Ambience Healthcare on Tuesday announced a new medical coding model that outperforms doctors by 27%.

Ambience uses AI to draft clinical notes in real-time as doctors consensually record their visits with patients. The company used tools from OpenAI to build the new model.

The startup is part of a fiercely competitive market that has taken off as health-care executives search for solutions to help reduce staff burnout and daunting administrative workloads. 

The company’s new model can listen to patient encounters and identify ICD-10 codes, which are internationally standardized classifications for different diseases and conditions. There are about 70,000 ICD-10 codes that are regularly updated and used to facilitate billing and other reporting processes in health care. 

Ambience said its new ICD-10 model can reduce billing mistakes and help clinicians and professional coders work more efficiently. The model notched a “27% relative improvement over physician benchmarks,” according to a release on Tuesday.  

“We’re not replacing doctors or coders,” Brendan Fortuner, Ambience’s head of engineering, told CNBC in an interview. “What we’re doing is we’re liberating them from administration, and we’re fixing mistakes that help make health care better, safer, more cost-effective.”

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Documenting ICD-10 codes has traditionally been a labor-intensive task in health care, but it’s a crucial way to track outcomes, mortalities and morbidities in a standardized way, said Dr. Will Morris, the chief medical officer of Ambience.

“If you think about it from a data perspective, it’s how you can compare and contrast clinician A to B, or health system A to B,” Morris said in an interview. “It’s the cornerstone for quality.”

Ambience’s technology is used at more than 40 health-care organizations, like Cleveland Clinic and UCSF Health. It has raised more than $100 million, according to PitchBook, from investors including Kleiner Perkins, Andreessen Horowitz and the OpenAI Startup Fund. 

The company is reportedly seeking fresh capital at a valuation of over $1 billion, according to a report from The Information. Ambience declined to comment on the report. 

Ambience trained its new AI model using OpenAI’s reinforcement fine-tuning technology. This technology allows companies to tune OpenAI’s best reasoning models for very specific domains, like health care. 

To validate the model, Ambience tested it against a “gold panel” set of labels, the company said. The labels were established by a group of expert clinicians who evaluated complex clinical cases and came to an agreement on what the right codes were. 

Ambience’s AI platform for compliant documentation, CDI, and coding.

Courtesy of Ambience Healthcare

The company then recruited 18 different board-certified doctors and compared their performance on ICD-10 coding accuracy to the model’s performance. That comparison showed the Ambience technology performed 27% better than the physician baseline. 

“It shows for the first time that an AI system can actually surpass clinician experts at a very, very important administrative task, especially in coding,” Fortuner said. 

Ambience already has similar capabilities available for other medical codes like Current Procedural Terminology (CPT) codes, and Fortuner said it’s exploring how to tackle other areas like prior authorizations, utilization management and clinical trial matching. 

The company’s new ICD-10 model will roll out to customers over the summer.

“Getting it right at the point of care is a fundamental change,” Morris said.

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