Elon Musk has made a bold move in the ongoing battle over OpenAI, leading a consortium that has offered $97.4 billion to acquire the nonprofit controlling the AI powerhouse. This offer escalates tensions between Elon Musk and OpenAI CEO Sam Altman, who promptly dismissed the bid with a quip on X, suggesting instead that OpenAI could buy Twitter for $9.74 billion.
Elon Musk co-founded OpenAI in 2015 alongside Sam Altman but left before its rapid ascent. He later established xAI, a competing AI startup, in 2023. His offer to acquire OpenAI’s nonprofit arm comes amid his effort to influence the artificial intelligence development.
OpenAI has been transitioning from a nonprofit to a for-profit entity, arguing that the shift is necessary to secure the capital required for AI advancements. Elon Musk has been a vocal critic of this transition, having sued Altman and other OpenAI executives last year, claiming they abandoned the original mission to prioritize profit over the public good.
Elon Musk’s legal action centers on allegations that OpenAI was founded with a commitment to open-source AI development for humanity’s benefit but has since pivoted toward commercial gains. In his statement announcing the acquisition offer, Elon Musk reiterated his belief that OpenAI must return to its original vision. Microsoft, a key OpenAI backer, has not publicly commented on the bid.
Experts suggest that Elon Musk’s offer introduces a significant challenge to OpenAI’s efforts to shift control away from the nonprofit. Rose Chan Loui of the UCLA Law Center for Philanthropy and Nonprofits noted that Elon Musk’s bid effectively establishes a valuation benchmark for OpenAI’s nonprofit economic interests, raising questions about whether OpenAI’s leadership can justify rejecting the offer. If the nonprofit values its stake at less than Elon Musk’s offer, it would need to explain why to its stakeholders.
Elon Musk’s consortium includes xAI, Baron Capital Group, and Emanuel Capital, among others. Reports suggest that if the acquisition is successful, xAI could merge with OpenAI. With xAI’s recent valuation reaching $40 billion following a $6 billion investment round, Elon Musk’s financial capacity for such a deal remains in question.
His Tesla holdings are valued at approximately $165 billion, but after his leveraged $44 billion Twitter acquisition, his ability to secure further financing is uncertain. Analysts suggest that he could sell Tesla shares, take a loan against his stake, or leverage his significant SpaceX holdings, Reuters news report said.
OpenAI’s most recent valuation reached $157 billion, making it one of the world’s most valuable private companies. SoftBank is reportedly in discussions to lead a funding round that could push OpenAI’s valuation to $300 billion. Elon Musk’s bid could significantly disrupt this process, complicating OpenAI’s transition into a for-profit corporation.
D.A. Davidson analyst Gil Luria suggests that the bid, backed by credible investors, forces OpenAI’s board to seriously evaluate whether it presents a better option than SoftBank’s potential investment. This development could have far-reaching implications for OpenAI’s corporate structure and the future of AI governance.
