Musk vs. Altman Heads to Court, and AI Still Can’t Find the Profit

The Musk-Altman Trial Is Finally Here

Elon Musk and Sam Altman are going to court this week, and the stakes couldn’t be higher. OpenAI is gearing up for an IPO, but the court might decide whether it can even exist as a for-profit company. Musk, who was an early co-founder, claims he was tricked into funding the nonprofit under false pretenses. He’s asking for $134 billion in damages, wants Altman and president Greg Brockman removed, and wants OpenAI returned to its original nonprofit structure.

This isn’t just a personal grudge match. The ruling could reshape the entire global AI race. If the court sides with Musk, it could blow a hole in OpenAI’s business model and send shockwaves through the industry. If it sides with Altman, it sets a precedent that nonprofits can pivot to for-profit status without consequences. Either way, this trial is going to be messy, and I’ll be watching closely.

AI’s “Underpants Gnomes” Problem

There’s a classic South Park episode where a group of gnomes pitch a business plan: Phase 1: Collect underpants. Phase 2: ? Phase 3: Profit. That’s basically where AI is right now. Companies have built the technology (Phase 1) and promised massive transformation (Phase 3), but the middle step is still a giant question mark.

Will Douglas Heaven nails this in his piece. The hype is real, but the revenue isn’t following at the same pace. AI companies are burning cash on compute, talent, and data, while customers are still figuring out how to actually monetize these tools. Some paths forward exist—selling enterprise licenses, embedding AI into existing products, or betting on a platform shift—but none of them are slam dunks yet. The profit question is the one everyone’s avoiding, but it’s the one that matters most.

Weaponized Deepfakes Are Here, and They’re Ugly

For years, experts warned that deepfakes could be used for harm. That warning has now become reality. Cheap, accessible models are producing deepfakes that look startlingly real—from sexually explicit images to political propaganda. They’re already inciting violence, changing minds, and eroding trust, with women and marginalized groups bearing the brunt.

Eileen Guo’s reporting highlights how these tools are cratering critical thinking. When you can’t trust video evidence anymore, democracy itself takes a hit. And the tech is only getting cheaper and easier to use. This isn’t a future problem—it’s happening right now, and we’re not ready for it.

Quick Hits From the News

• OpenAI ended its exclusive partnership with Microsoft. The new deal lets OpenAI court rivals like Amazon, though Microsoft will still license the tech. OpenAI is also missing key growth targets ahead of its IPO, which doesn’t inspire confidence.
• Google signed a classified AI deal with the Pentagon, allowing AI use for “any lawful government purpose.” Over 600 Google workers had called for a block on the deal. AI firms are now training military versions of their models on classified data. This is a big deal, and the internal backlash is worth watching.
• [The rest of the original content was truncated, but these are the highlights worth noting.]

My Take

The Musk-Altman trial is going to be a circus, but it’s a necessary one. The AI industry has been operating in a legal gray area for too long. Meanwhile, the profit problem and deepfake crisis show that the industry is still immature. We’re building powerful tools without fully understanding their economic or social consequences. That’s a recipe for trouble.

I’m not sure where the trial will land, but I hope it forces some clarity. And I hope the industry starts taking the profit question and the deepfake problem more seriously. Because right now, Phase 2 is still a question mark, and we’re running out of time to fill it in.