New York: A consortium spearheaded by Elon Musk has submitted a $97.4 billion bid to acquire the nonprofit organization overseeing OpenAI, escalating the ongoing battle over the future of the artificial intelligence powerhouse. The bid is seen as an attempt to prevent OpenAI from completing its transition to a for-profit entity.
Musk’s move intensifies his long-standing rivalry with OpenAI CEO Sam Altman, who swiftly responded on X, saying, “No thank you, but we will buy Twitter for $9.74 billion if you want.”
Musk’s Long-Running Feud with OpenAI
Musk, who co-founded OpenAI with Altman in 2015 as a nonprofit venture, left before its rapid expansion. In 2023, he launched xAI, a competing AI startup.
Now the CEO of Tesla and owner of X, Musk is a key ally of President Donald Trump. He reportedly spent over $250 million supporting Trump’s re-election and leads the newly formed Department of Government Efficiency, a White House unit focused on reducing bureaucracy.
Musk recently clashed with the U.S. administration over a $500 billion OpenAI-led initiative announced at the White House, further fueling tensions.
Legal Battle Over OpenAI’s Transition
OpenAI is pushing to convert from a nonprofit into a for-profit company, arguing that such a shift is necessary to secure funding for advanced AI development.
Musk, however, has sued OpenAI and Altman, claiming they violated their original agreement by prioritizing profit over public interest. His lawsuit, filed in August last year, alleges that OpenAI’s transition contradicts its founding principles.
“It’s time for OpenAI to return to the open-source, safety-focused force for good it once was,” Musk stated on Monday. “We will make sure that happens.”
Musk had also sought a preliminary injunction in November to halt OpenAI’s structural transition.
Financial Implications and Potential Merger
The Musk-led bid, first reported by The Wall Street Journal, comes amid discussions about OpenAI’s valuation. In its last funding round, the company was valued at $157 billion. Reuters previously reported that SoftBank was in talks to invest up to $40 billion, potentially raising OpenAI’s valuation to $300 billion.
Musk’s offer could reshape these negotiations. The billionaire’s Tesla stake is valued at approximately $165 billion, but raising funds for a deal of this magnitude could be complex.
Possible financing options include:
- Selling a portion of his Tesla shares
- Taking out loans against his stake
- Leveraging his SpaceX holdings, estimated to be worth tens of billions
The Musk-led group includes xAI, Baron Capital Group, Emanuel Capital, and other investors.
A successful acquisition could lead to a merger between xAI and OpenAI, reshaping the AI industry landscape.
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Expert Reactions
Rose Chan Loui, Executive Director at UCLA Law Center for Philanthropy and Nonprofits, noted:
“This bid sets a new marker for the nonprofit’s economic value. If OpenAI rejects it in favor of a lower offer, they would need to justify their decision.”
Yale Law School professor Jonathan Macey warned that OpenAI’s nonprofit status complicates the deal:
“If OpenAI prefers to sell to someone else for less money, it raises concerns about the fiduciary responsibility toward the nonprofit’s beneficiaries.”
Meanwhile, D.A. Davidson analyst Gil Luria argued that Musk’s bid could disrupt OpenAI’s fundraising efforts:
“The offer seems credible, and OpenAI’s board has a fiduciary duty to consider it. This could put SoftBank’s bid under scrutiny.”
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What’s Next?
If Musk’s bid gains traction, it could significantly delay or even derail OpenAI’s transition to a for-profit model. However, regulatory and financial hurdles remain, and it is unclear whether OpenAI’s board will engage with the offer.
As the AI arms race intensifies, Musk’s latest move underscores the high-stakes battle over the future of artificial intelligence.
