In a surprising twist, Elon Musk, along with his AI startup xAI and a consortium of investment firms, has made a bold offer to purchase OpenAI for approximately $97.4 billion. The move aims to revert OpenAI back to its original nonprofit mission as a charitable research lab dedicated to advancing artificial intelligence safely for public benefit.
Musk’s attorney, Marc Toberoff, confirmed the proposal, emphasizing that the acquisition would realign OpenAI with its founding goals. However, OpenAI CEO Sam Altman wasted no time in rejecting the unsolicited bid. Taking to Musk’s own social platform, X, Altman quipped, “No thank you but we will buy Twitter for $9.74 billion if you want.” Musk famously acquired Twitter, now called X, in 2022 for $44 billion.
A Long-Standing Feud Resurfaces
Musk, who co-founded OpenAI with Altman in 2015, has been at odds with the organization since stepping down from its board in 2018. He later sued OpenAI, alleging that it had strayed from its original mission as a nonprofit dedicated to building safe, better-than-human AI for public good. Musk had invested approximately $45 million in the startup during its early years.
The tensions escalated following the meteoric rise of ChatGPT, which brought global fame and financial success to OpenAI. Internal disputes over the organization’s direction came to a head in late 2023 when OpenAI’s nonprofit board briefly ousted Altman, only for him to return days later with a restructured board.
Legal Complications and Nonprofit Status
The legal landscape surrounding OpenAI’s potential transition to a for-profit entity is complex. U.S. tax law stipulates that assets or funds donated to a tax-exempt organization must remain within the charitable sector. Any conversion to a for-profit structure would require the for-profit entity to pay the fair market value of those assets to another charitable organization.
Musk and his legal team have expressed concerns about OpenAI’s relationship with Microsoft and its shift toward commercialization. Toberoff argued that if OpenAI transitions to a fully for-profit model, it must fairly compensate the charitable sector for its assets, describing the technology as “the most transformative of our time.”
Courtroom Battle Looms
Last week, lawyers for Musk and OpenAI faced off in a California federal court. U.S. District Judge Yvonne Gonzalez Rogers acknowledged the complexity of the case, stating that Musk’s claims of potential harm were a “stretch.” Nevertheless, she allowed the case to proceed toward a potential trial next year.
“It is plausible that what Mr. Musk is saying is true. We’ll find out. He’ll sit on the stand,” the judge noted, signaling a willingness to explore Musk’s assertions.
Competitive Bidding Concerns
In early January, Musk’s attorney sent a letter to the attorneys general of California and Delaware, urging them to ensure that any transactional process involving OpenAI’s charitable assets adheres to competitive bidding protocols to determine their fair market value.
Backing Musk’s bid are prominent investment firms, including Baron Capital Group, Valor Management, Atreides Management, Vy Fund, Emanuel Capital Management, and Eight Partners VC. Toberoff stressed the importance of protecting public interest, arguing that OpenAI’s leadership should fairly compensate the charity for relinquishing control over its groundbreaking AI technology.
What Lies Ahead?
As OpenAI continues to navigate its path forward, the standoff between Musk and Altman underscores the high stakes involved in the rapidly evolving AI landscape. With legal proceedings set to continue, the future of OpenAI’s structure and mission remains uncertain, while the world watches closely.
Source: apnews
