In a bold move, Elon Musk, alongside a consortium of investors, has proposed a $97.4 billion offer to acquire OpenAI, the renowned artificial intelligence research organization. This bid intensifies the ongoing rivalry between Musk and OpenAI’s CEO, Sam Altman, over the company’s strategic direction.
Musk, who co-founded OpenAI with Altman in 2015 as a nonprofit entity, departed before the organization’s significant rise. In 2023, he established xAI, a competing AI startup. The current consortium includes xAI, Baron Capital Group, Emanuel Capital, and other notable investors. Their collective aim is to steer OpenAI back to its original mission of being an open-source, safety-centric institution.
The offer has been met with resistance from Altman, who promptly declined and humorously retorted on social media, stating, “No thank you but we will buy Twitter for $9.74 billion if you want.” This quip references Musk’s acquisition of the platform, now rebranded as X, in 2022.
OpenAI is currently transitioning from its nonprofit roots to a for-profit model, a move it deems necessary to attract substantial capital for advancing AI technologies. This shift has been a point of contention, with Musk previously suing Altman and other OpenAI leaders in August of the previous year. He alleged that they prioritized profit over public welfare in their pursuit of AI advancements. In November, Musk sought a preliminary injunction from a U.S. district judge to halt OpenAI’s conversion to a for-profit structure.
“It’s time for OpenAI to return to the open-source, safety-focused force for good it once was,” Musk asserted in a recent statement. “We will make sure that happens.”
Analysts believe that Musk’s bid could significantly complicate OpenAI’s fundraising efforts and its plans to become a for-profit corporation. Gil Luria, an analyst at D.A. Davidson, commented, “The offer seems to be backed by more credible investors… OpenAI may not be able to ignore it. It will be the fiduciary responsibility of OpenAI’s board to decide whether this is a better offer, which could call into question the offer from SoftBank.”
OpenAI was valued at $157 billion in its last funding round, solidifying its position as one of the world’s most valuable private companies. Reports from January indicated that SoftBank Group was in discussions to lead a funding round of up to $40 billion in OpenAI, aiming for a valuation of $300 billion, including the new funds.
Financing such a substantial bid would require Musk and his consortium to amass significant resources. Musk’s stake in Tesla is valued at approximately $165 billion, but his leverage with banks may be limited following his $44 billion acquisition of X in 2022. Potential strategies to fund the bid could include selling a portion of his Tesla shares, securing loans against his holdings, or using his stake in SpaceX, valued at tens of billions of dollars, as collateral.
The tech community remains divided over Musk’s proposal. Some experts support the idea of OpenAI returning to its nonprofit origins, emphasizing the importance of open and affordable access to AI for fostering innovation. Others are skeptical, viewing the bid as part of Musk’s strategic maneuvers tied to ongoing legal battles with OpenAI. Concerns have also been raised about Musk’s management practices and the potential negative impact on AI innovation if OpenAI shifts further towards commercialization.
As the situation unfolds, the industry keenly watches the potential implications of this high-stakes bid on the future of artificial intelligence development.
