Summary:
Elon Musk and his consortium have made a staggering $97.4 billion bid to acquire OpenAI’s controlling nonprofit, intensifying his long-standing feud with CEO Sam Altman. Musk, a co-founder of OpenAI, has been a vocal critic of its shift toward a for-profit model, arguing that AI should remain open and beneficial for humanity.
The bid, backed by xAI, Baron Capital, and Emanuel Capital, comes amid Musk’s legal battle against OpenAI, where he claims the company abandoned its original mission. However, OpenAI’s board has dismissed the offer, with Altman sarcastically responding that he’d buy Twitter for $9.74 billion instead.
With SoftBank’s competing investment proposal and OpenAI’s sky-high valuation of up to $300 billion, Musk’s ability to finance the takeover remains uncertain. If successful, his move could reshape the AI industry, sparking debates on the ethics and future of AI development.
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In a dramatic turn of events, a consortium led by billionaire entrepreneur Elon Musk has made a staggering $97.4 billion offer to acquire OpenAI’s controlling nonprofit. This latest move intensifies the ongoing power struggle between Musk and OpenAI’s CEO, Sam Altman, over the direction of one of the world’s most influential AI companies.
A Long-Standing Feud Reignited
Musk co-founded OpenAI alongside Altman in 2015, originally intending for it to remain a nonprofit focused on AI development for the public good. However, Musk parted ways with the company before it gained global recognition with its generative AI models like ChatGPT. Since then, he has been an outspoken critic of OpenAI’s shift towards a for-profit model, a transition the organization claims is necessary to secure the funding needed for AI advancements.
The tension between Musk and Altman has been no secret, but Altman’s response to Musk’s offer was swift and sharp. In a post on X (formerly Twitter), he dismissed the bid, quipping, “No thank you, but we will buy Twitter for $9.74 billion if you want.”
Musk’s Legal and Financial Battle Against OpenAI
Musk’s attempt to take control of OpenAI is not his first legal move against the company. In August 2024, he sued Altman and other OpenAI executives, alleging they had abandoned the nonprofit’s original mission in favor of profit-driven motives. He later sought a court injunction to prevent OpenAI from fully transitioning into a for-profit entity.
With his latest bid, Musk has made it clear that he wants OpenAI to return to its roots. “It’s time for OpenAI to return to the open-source, safety-focused force for good it once was,” Musk stated on Monday.
Who’s Backing Musk’s Bid?
Musk is not making this move alone. His AI startup, xAI, has joined forces with Baron Capital Group, Emanuel Capital, and other investors to make this ambitious offer. Reports suggest that if the deal goes through, xAI could merge with OpenAI, potentially reshaping the AI landscape.
However, the financial feasibility of Musk’s bid is a major question. OpenAI was recently valued at $157 billion, with reports indicating that SoftBank is considering a $40 billion investment at a valuation of $300 billion. This raises doubts about whether Musk can secure enough funds to outbid SoftBank and OpenAI’s other potential investors.
The Roadblocks Ahead
The offer throws a wrench into OpenAI’s current fundraising and for-profit transition plans. Legal experts point out that OpenAI’s board has a fiduciary responsibility to consider Musk’s bid seriously, especially given its substantial financial backing.
Jonathan Macey, a corporate governance expert at Yale Law School, commented, “If OpenAI prefers to sell to somebody else for less money, it raises concerns about protecting the interests of the nonprofit’s beneficiaries.”
Funding the bid presents another challenge. Musk’s stock in Tesla is worth approximately $165 billion, but his leverage with banks may be stretched thin following his $44 billion acquisition of Twitter (now X) in 2022. Potential funding strategies include selling Tesla shares, taking loans against his stock, or using his stake in SpaceX as collateral.
What’s Next for OpenAI?
While OpenAI’s board has dismissed Musk’s bid for now, analysts suggest that they may have no choice but to reconsider. “The offer seems to be backed by more credible investors,” said Gil Luria, an analyst at D.A. Davidson. “OpenAI may not be able to ignore it. The board must assess whether this is a better deal than SoftBank’s offer.”
With billions of dollars, corporate power struggles, and the future of AI at stake, this saga is far from over. Whether Musk succeeds in reclaiming OpenAI or not, his bid ensures that the fight over the control and ethics of artificial intelligence will remain in the global spotlight.
