Elon Musk offers $97 billion to take control of OpenAI
Elon Musk and his consortium propose a $97 billion bid to acquire OpenAI’s nonprofit arm, escalating tensions with CEO Sam Altman over the company’s future.
[:en]Photo: Reuters[:]
A consortium led by Elon Musk said Monday it has offered $97.4 billion to buy the nonprofit that controls OpenAI, the latest move in the billionaire’s fight to prevent the artificial intelligence startup from becoming a for-profit company, reported by Reuters.
Musk, CEO of Tesla and owner of tech and social media company X, is a close ally of President Donald Trump. He spent more than a quarter of a billion dollars to help elect Trump and heads the Office of Government Efficiency, a new White House department tasked with radically reducing the federal bureaucracy. Musk recently criticized the $500 billion OpenAI project that Trump announced at the White House.
Musk’s offer heightens tensions with Altman
Musk’s offer is likely to heighten long-standing tensions with OpenAI CEO Sam Altman over the future of ChatGPT, the maker of the generative AI technology at the center of a boom in generative AI technology. Musk co-founded OpenAI as a non-profit in 2015 with Altman but left before the company could take off. In 2023, he founded an artificial intelligence startup called xAI. According to the report, Altman told employees in a memo that the company’s board of directors intends to make it clear that it is not interested in Musk’s “intended bid.”
The consortium led by Musk includes his AI startup xAI, Baron Capital Group, Emanuel Capital and others. xAI recently raised $6 billion from investors at a valuation of $40 billion. OpenAI’s latest funding round valued it at $157 billion, cementing its status as one of the world’s most valuable private companies. SoftBank Group, opens a new tab, is in talks to lead a funding round for OpenAI worth up to $40 billion, at a valuation of $300 billion, including new funds. Aside from any antitrust implications, a deal of this magnitude would require Musk and his consortium to raise a huge amount of money. Musk’s Tesla stake is valued at about $165 billion, but his leverage with banks is likely to be weak after he bought X, then called Twitter, in 2022 for $44 billion.
To finance such a deal, Musk could sell some of his Tesla stake or borrow against his stake or use his stake in rocket company SpaceX, which is worth tens of billions of dollars, as collateral, according to a nonpartisan investment banker who spoke on condition of anonymity. Musk’s offer to buy the nonprofit OpenAI is set to make OpenAI’s ongoing fundraising and transformation into a for-profit corporation much more difficult. The offer appears to have the backing of more solid investors… OpenAI may not be able to ignore it. OpenAI’s board will be responsible for deciding whether the offer is superior, which could put SoftBank’s offer in doubt.
Offer complicates OpenAI’s transition to for-profit
OpenAI is currently trying to transition from a for-profit to a nonprofit, which it says is needed to secure the capital it needs to develop the best AI models. Last August, Musk sued Altman and others, alleging they breached a contract by putting profit above the public good in their efforts to advance AI.
In November, he asked a U.S. district judge for a preliminary injunction against OpenAI’s transformation into a for-profit entity. Musk’s lawsuit against OpenAI and Altman says the founders originally approached him to fund a nonprofit focused on developing artificial intelligence for the benefit of humanity, but it is now focused on making money.
