Two of Silicon Valley’s most prominent tech titans, Elon Musk and his former protégé Sam Altman, are in the middle of a very public feud over the future of OpenAI, the company behind the groundbreaking ChatGPT.
Musk – the world’s richest man and CEO of Tesla and SpaceX – has filed multiple lawsuits over the past year to stop Altman from restructuring OpenAI from a hybridised nonprofit into a for-profit company.
Earlier this week, Musk raised the stakes by offering to buy the nonprofit for $97.4bn to preserve the original mission of the AI research lab – ensuring that “artificial general intelligence benefits all of humanity”.
Musk’s proposal was quickly rebuffed by Altman.
In the latest development, Musk said through his lawyers on Wednesday that he would drop his offer if OpenAI remains a nonprofit, which would prevent the company from accessing potentially billions of dollars in funding.
Amid their legal stoush, the two men have publicly traded barbs attacking each other’s character.
So how did things turn so acrimonious between two of Silicon Valley’s most famous CEOs?
What is the origin of the feud according to OpenAI?
Musk, 53, and Altman, 39, were once colleagues.
The two co-founded OpenAI in 2015 alongside several other prominent figures in artificial intelligence research. Musk and Altman served as the company’s first co-chairs.
At the time, Musk, as the founder of Tesla and SpaceX, was a much more well-known figure in Silicon Valley.
OpenAI began as a nonprofit, with a stated mission focusing on research and safety, rather than making money.
According to OpenAI’s account, problems began to emerge in 2017 when it became apparent that it would need much more computing power and hundreds of millions of dollars in funding if it hoped to create artificial general intelligence.
According to internal emails shared by OpenAI on its website, Musk allegedly wanted to switch to a for-profit entity with himself serving as CEO. As disagreement over the future of the company escalated, Musk is said to have withheld funding in retaliation.
Musk left the company in 2018, according to OpenAI, but was initially still supportive of its work. He went on to acquire Twitter in 2022 and founded his own AI company, xAI, in 2023.
In the years since Musk’s departure, OpenAI underwent major changes. In 2019, OpenAI created a for-profit subsidiary to help raise funds, turning the company into a sort of nonprofit-corporate hybrid.
Three years later, in 2022, the company became a household name, along with Altman, following the release of the groundbreaking ChatGPT.
What is the origin of the feud according to Musk?
Tensions between Musk and Altman began to escalate again in 2023 when Microsoft agreed to invest $10bn in OpenAI, on top of $3bn in earlier investments.
Musk did not respond to Al Jazeera’s request for comment, but his views on OpenAI have been shared in legal filings.
Musk alleged in a lawsuit last year that OpenAI had become a de facto subsidiary of Microsoft, calling the deal a deceit of “Shakespearean proportions” and a bid by Altman to “cash in” on generative AI.
Some of Musk’s concerns were, notably, shared by the United States and European regulators, who also launched antitrust investigations into the deal.
Musk expanded his lawsuit in November, arguing the two companies were monopolising the market in generative AI.
He alleged that Altman told investors not to back Musk’s xAI and other rivals during OpenAI’s latest round of fundraising and said that Microsoft and OpenAI’s relationship needed to be unwound to “preserve what is left of OpenAI’s nonprofit character, free from self-dealing”.
What have Musk and Altman said about each other?
The two CEOs have pulled punches online, in the media and in court filings. Earlier this week, the pair clashed publicly on X following Musk’s offer to buy the company.
“No thank you but we will buy twitter for $9.74 billion if you want,” Altman wrote, using the X’s former name.
“Swindler,” Musk wrote in response.
Going on the offence in the media, Altman said in an interview on Tuesday that his former mentor was motivated by his own demons – rather than concern for the future of Open AI – and operated “from a position of insecurity”.
“I feel bad for the guy,” Altman told Bloomberg TV at the Paris AI Action Summit.
“I think it’s to slow down a competitor and catch up with his thing, but I don’t really know … to the degree anybody does,” he said of Musk and his rival company, xAI.
Musk, for his part, has portrayed Altman as a greedy and “unscrupulous” con man in his lawsuits against OpenAI.
In court filings in August, Musk’s lawyers referred to Altman’s management of Open AI as a “hot-air philanthropy … long-con” and a “textbook tale of altruism versus greed”.
Musk’s lawyers also alleged that Altman and other members of OpenAI “intentionally courted and deceived Musk, preying on Musk’s humanitarian concern about the existential dangers posed by artificial intelligence”.
Why does OpenAI want to go private?
Altman and OpenAI’s board argue that the company needs to be restructured to acquire its next round of funding from Softbank, a Japanese multinational, which recently valued the company at $260bn.
While it is not unheard of for a company to switch from a nonprofit to a for-profit company – particularly in the healthcare sector – the scale of OpenAI’s endeavour stands out, said Rose Chan Loui, the founding executive director for the Lowell Milken Center on Philanthropy and Nonprofits.
Under OpenAI’s proposed restructuring, the for-profit subsidiary would compensate the nonprofit entity for its assets, creating a new for-profit company – but Musk’s offer of $97.4bn has complicated the deal, she said.
“If a conversion is going to go through, the next challenge is determining what amount of compensation the nonprofit should receive. This should be fair market value. Previously, OpenAI reportedly was contemplating something in the range of $30-40bn,” Chan Loui told Al Jazeera.
“Elon Musk’s offer challenges the adequacy of that number. The nonprofit board will need to ‘consider’ the offer, and OpenAI will need to explain – to the nonprofit board, as well as to the attorneys general of Delaware and California – why Musk’s offer is not better for the nonprofit than what OpenAI is willing to offer,” she said.
What does OpenAI say about Musk’s offer?
Besides Altman exchanging barbs with Musk online and in the media, OpenAI has filed a motion to dismiss Musk’s lawsuit.
In court, it has denied allegations that it tried to block funding to other start-ups and questioned Musk’s intentions.
In legal filings shared with Al Jazeera, Altman’s lawyer Jordan Eth said that Musk’s “concerns” about the OpenAI’s future “do not apply, so long as Musk and his allies are the buyers”.
“Musk would have OpenAI, Inc. transfer all of its assets to him, for his economic benefit and that of his competing AI business and hand-picked private investors,” Eth said, according to a filing.
