Elon Musk is making a power play for OpenAI, the AI startup behind ChatGPT, with a hefty $97.4 billion offer for the non-profit that controls it. This move intensifies the ongoing battle between Musk and OpenAI CEO Sam Altman over the company’s future and its transition to a for-profit model. Altman’s quick-witted response on X, “No thank you, but we will buy Twitter for $9.74-billion if you want,” suggests he’s not backing down.
Musk’s involvement with OpenAI goes back to its inception in 2015, when he co-founded it with Altman as a non-profit.He later departed and launched his own AI venture, xAI, in 2023. This isn’t just a business disagreement; it’s a clash of visions. Musk has publicly stated his desire for OpenAI to return to its original mission: an open-source, safety-focused organization dedicated to the betterment of humanity. “It’s time for OpenAI to return to the open-source, safety-focused force for good it once was,” Musk stated. “We will make sure that happens.”
The core of the issue lies in OpenAI’s move to become a for-profit entity. They argue this shift is necessary to secure the massive capital required to develop cutting-edge AI models. Musk, however, believes this move prioritizes profit over the public good, a point he underscored in a lawsuit filed against Altman and OpenAI last year. He even sought an injunction to block the for-profit conversion.
Its all about control
This bid isn’t just about money; it’s about control. Rose Chan Loui from UCLA Law Center for Philanthropy and Nonprofits points out that this offer establishes a clear benchmark for the non-profit’s economic stake. If OpenAI values its stake at less than Musk’s offer, they’ll need a compelling justification.
Musk’s consortium includes his own xAI, Baron Capital Group, Emanuel Capital, and others. Rumors are swirling that xAI could potentially merge with OpenAI if the deal goes through. This is a serious challenge to OpenAI’s existing plans, including a potential $300 billion valuation in a funding round led by SoftBank.
Jonathan Macey, a Yale Law School professor, highlights the fiduciary responsibility of the non-profit’s board. They are obligated to consider this offer, especially if it’s more advantageous than other options. This could throw a wrench into OpenAI’s current fundraising efforts and its transition to a for-profit structure.
Of course, a deal of this magnitude faces significant hurdles. Apart from potential antitrust issues, Musk would need to secure substantial financing. While his Tesla stock is valued at around $165 billion, his recent acquisition of Twitter (now X) for $44 billion might limit his borrowing capacity. He could potentially leverage his Tesla or SpaceX holdings to finance this bid.
Gil Luria, an analyst at DA Davidson, believes this offer is too significant for OpenAI to ignore, particularly given the backing of credible investors. It will force OpenAI’s board to carefully weigh this offer against the SoftBank proposal.
This story was originally reported by Reuters.
