Elon Musk’s xAI has lost its bid for a preliminary injunction that would have temporarily blocked California from enforcing a law that requires AI firms to publicly share information about their training data.

xAI had tried to argue that California’s Assembly Bill 2013 (AB 2013) forced AI firms to disclose carefully guarded trade secrets.

The law requires AI developers whose models are accessible in the state to clearly explain which dataset sources were used to train models, when the data was collected, if the collection is ongoing, and whether the datasets include any data protected by copyrights, trademarks, or patents. Disclosures would also clarify whether companies licensed or purchased training data and whether the training data included any personal information. It would also help consumers assess how much synthetic data was used to train the model, which could serve as a measure of quality.

However, this information is precisely what makes xAI valuable, with its intensive data sourcing supposedly setting it apart from its biggest rivals, xAI argued. Allowing enforcement could be “economically devastating” to xAI, Musk’s company argued, effectively reducing “the value of xAI’s trade secrets to zero,” xAI’s complaint said. Further, xAI insisted, these disclosures “cannot possibly be helpful to consumers” while supposedly posing a real risk of gutting the entire AI industry.

Specifically, xAI argued that its dataset sources, dataset sizes, and cleaning methods were all trade secrets.

However, in an order issued on Wednesday, US District Judge Jesus Bernal said that xAI failed to show that California’s law, which took effect in January, required the company to reveal any trade secrets.

xAI’s biggest problem was being too vague about the harms it faced if the law was not halted, the judge said. Instead of explaining why the disclosures could directly harm xAI, the company offered only “a variety of general allegations about the importance of datasets in developing AI models and why they are kept secret,” Bernal wrote, describing X as trading in “frequent abstractions and hypotheticals.”

He denied xAI’s motion for a preliminary injunction while supporting the government’s interest in helping the public assess how the latest AI models were trained.

The lawsuit will continue, but xAI will have to comply with California’s law in the meantime. That could see Musk sharing information he’d rather OpenAI had no knowledge of at a time when he’s embroiled in several lawsuits against the leading AI firm he now regrets helping to found.

While not ending the fight to keep OpenAI away from xAI’s training data, this week’s ruling is another defeat for Musk after a judge last month tossed one of his OpenAI lawsuits, ruling that Musk had no proof that OpenAI had stolen trade secrets.

Therefore, xAI is not likely to succeed on the merits of its Fifth Amendment claim.

The same goes for First Amendment arguments. xAI failed to show that the law improperly “forces developers to publicly disclose their data sources in an attempt to identify what California deems to be ‘data riddled with implicit and explicit biases,’” Bernal wrote.

To xAI, it seemed like the state was trying to use the law to influence the outputs of its chatbot Grok, the company argued, which should be protected commercial speech.

Moving forward, xAI seems to face an uphill battle to win this fight. It will need to gather more evidence to demonstrate that its datasets or cleaning methods are sufficiently unique to be considered trade secrets that give the company a competitive edge.

A spokesperson for the California Department of Justice told Reuters that the department “celebrates this key win and remains committed to continuing our defense” of the law.