Elon Musk bids $97.4 billion for OpenAI
A consortium led by Elon Musk has submitted a bid amounting to $97.4 billion for the acquisition of OpenAI.
Elon Musk is engaged in a conflict with Sam Altman regarding the firm responsible for ChatGPT.
A group of investors spearheaded by Elon Musk has proposed a substantial $97.4 billion to acquire the nonprofit organization overseeing OpenAI, intensifying the competition with Sam Altman regarding the entity responsible for ChatGPT.
Marc Toberoff, representing Musk, indicated that he presented the bid to the board of directors at OpenAI on Monday.
The unexpected proposal introduces significant complexity to Altman’s meticulously crafted strategy for OpenAI’s trajectory, which encompasses transitioning to a for-profit model and allocating as much as $500 billion towards AI infrastructure via a collaborative initiative named Stargate. He and Musk are currently engaged in legal disputes concerning the strategic trajectory of OpenAI.
Musk asserted in a statement from Toberoff that OpenAI should revert to its original mission as an open-source, safety-oriented entity dedicated to the greater good. “We will ensure that this comes to fruition.”
OpenAI representatives were unavailable for immediate comment.
In 2015, Altman and Musk established OpenAI with the intention of operating as a charitable organization. In 2019, following Musk’s departure and Altman’s ascension to chief executive, OpenAI established a for-profit subsidiary, which has facilitated fundraising efforts from Microsoft and various other investors. Altman is currently engaged in the transformation of the subsidiary into a conventional enterprise while simultaneously spinning off the nonprofit, which will retain equity in the newly established for-profit entity.
The valuation of the nonprofit remains one of the most contentious issues in the ongoing conversion debate. Musk’s proposal establishes a significant benchmark and suggests that he, or the individual overseeing the nonprofit, could ultimately possess a substantial and potentially dominant share in the restructured OpenAI.
The proposal is supported by Musk’s own artificial intelligence venture, xAI, which may potentially integrate with OpenAI as part of an agreement. His venture is supported by a range of investors, notably Valor Equity Partners, Baron Capital, Atreides Management, Vy Capital, and 8VC, the latter being a firm spearheaded by Joe Lonsdale, co-founder of Palantir. Ari Emanuel, the chief executive of Endeavor, a prominent player in the entertainment industry, is lending his support to the proposal via his investment fund.
Musk has initiated a number of legal actions alleging that OpenAI has strayed from its foundational nonprofit objectives by establishing a for-profit division and conspiring with its principal investor, Microsoft, to monopolize the advancement of artificial intelligence.
On January 7, Toberoff dispatched a correspondence to the attorneys general of California, the state housing OpenAI’s headquarters, and Delaware, its state of incorporation, requesting the initiation of a bidding process to ascertain the fair market value of the company’s charitable assets. Musk and various detractors have expressed concerns that OpenAI might not fully appreciate the worth of the nonprofit during its separation process.
OpenAI has characterized Musk’s legal assertions as unfounded and excessive, asserting that the nonprofit will obtain full value from its ownership interest in the for-profit entity. In December, the company disclosed documents indicating that Musk had previously advocated for transforming OpenAI into a for-profit entity but ultimately withdrew due to his inability to secure control over it.
Toberoff indicated that Musk’s investor consortium stands ready to match or surpass any competing offers that exceed their own.
“Should Sam Altman and the current OpenAI Inc. Board of Directors pursue a transition to a wholly for-profit entity, it is essential that the charitable organization receives appropriate compensation for the control it is relinquishing over the most transformative technology of our era,” he stated.
The day following Trump’s inauguration, Altman joined the new president and various business leaders to unveil a plan dubbed Stargate, aimed at investing as much as $500 billion over the ensuing four years in U.S. data centers.
Musk, despite his proximity to Trump, was notably absent from the announcement.
Shortly following the White House press conference, Musk asserted on X that the financial supporters of Stargate had failed to deliver the promised funds, labeling Altman as “a swindler.” Altman challenged Musk’s assertions.
Prior to Musk’s recent actions, OpenAI encountered a myriad of challenges in what is poised to be one of the most significant transitions from a charitable organization to a profit-driven enterprise. In December, rival Meta Platforms communicated its dissent regarding the plan to California’s attorney general. OpenAI is currently engaged in discussions with Microsoft and various stakeholders regarding the equity stakes they should obtain in the newly formed entity.
OpenAI has committed to finalizing the transition by late 2026, following a $6.6 billion funding round reported last month in October. SoftBank, the Japanese conglomerate, is poised to spearhead the funding round, currently engaged in negotiations to invest an amount ranging from $15 billion to $25 billion.
OpenAI and SoftBank are independently seeking to secure billions for Stargate, a venture that could face increasing challenges amid the uncertainty surrounding the company’s future, exacerbated by Musk’s bid.
