Elon Musk and a group of investors have offered $97.4 billion to acquire OpenAI's nonprofit arm that controls the company, reports the Wall Street Journal. Sam Altman, chief executive and a co-founder of Open AI, and the board of directors, have rejected the bid, stating the company's governance prevents outside control. Musk argues the nonprofit should remain committed to open-source safety-focused AI, while OpenAI is moving toward a for-profit model.
"It is time for OpenAI to return to the open-source, safety-focused force for good it once was," a statement by Elon Musk published by his lawyer Marc Toberoff reads. "We will make sure that happens."
The acquisition proposal is supported by Musk's AI company, xAI, and multiple investment companies, including Atreides Management, Baron Capital, 8VC, Valor Equity Partners, Vy Capital, and 8VC. In addition, the proposal is backed by Hollywood executive Ari Emanuel, CEO of Endeavor, and Joe Lonsdale, a co-founder of Palantir.
Musk's attorney, Marc Toberoff, submitted the offer to OpenAI's board, aiming to buy all nonprofit assets. This proposal challenges Sam Altman's plans to transition OpenAI into a traditional for-profit company while ensuring the nonprofit retains equity. OpenAI is raising billions to fund its AI infrastructure and a for-profit entity could raise more money and therefore speed up the progress of AI development in general and artificial general intelligence (AGI) in particular.
OpenAI is currently seeking to secure up to $40 billion in new funding in an investment round led by SoftBank, which is negotiating to contribute between $15 billion and $25 billion. If the company succeeds, this could increase OpenAI's valuation to $300 billion. The funding round follows a $6.6 billion funding round in October that valued OpenAI at $157 billion.
That said, OpenAI has confirmed it has no intention of accepting Musk's bid. In a message to employees, Altman emphasized that OpenAI's structure prevents any single person from taking control. He called Musk's offer a way to destabilize the rapidly developing company.
Musk, who co-founded OpenAI with Altman in 2015, left the company in 2019. Since then, OpenAI has raised substantial funding from Microsoft and other investors. Musk has taken legal action against OpenAI, claiming it abandoned its original mission by working closely with Microsoft. He has also questioned how OpenAI values its nonprofit entity as it transitions to for-profit status. In January, his lawyer contacted attorneys general in California and Delaware, urging them to oversee the valuation process to ensure fairness.
OpenAI insists Musk's legal claims are unfounded and that the nonprofit will be fairly compensated in the restructuring. The company also released documents showing Musk had previously supported a for-profit transition but withdrew when he could not gain control.
A part of OpenAI's vision is Stargate, an initiative to invest $500 billion in AI infrastructure in the U.S. over the next four years. Musk has publicly criticized Stargate, arguing that its supporters lack the necessary funding: shortly after the announcement, he called Altman a 'swindler' and claimed the project was overpromising. Altman denied Musk's allegations, but the dispute has added to the uncertainty surrounding OpenAI's transition.
