A consortium led by Elon Musk said it has offered $97.4 billion (€94.5 billion) to buy the nonprofit that controls OpenAI, another salvo in the billionaire’s fight to block the artificial intelligence startup from transitioning to a for-profit firm.
Mr Musk’s bid is likely to ratchet up long standing tensions with OpenAI CEO Sam Altman over the future of the ChatGPT maker at the heart of a boom in generative AI technology.
Mr Altman promptly posted on X “no thank you but we will buy twitter for $9.74 billion if you want.”
Mr Musk co founded OpenAI with Mr Altman in 2015 as a nonprofit, but left before the company took off. He founded the competing AI startup xAI in 2023.
Mr Musk, the 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 Mr Trump, and leads the Department of Government Efficiency, a new arm of the White House tasked with radically shrinking the federal bureaucracy.
Mr Musk recently criticised a $500 billion OpenAI-led project announced by Mr Trump at the White House.
OpenAI is now trying to transition into a for-profit from a nonprofit entity, which it says is required to secure the capital needed for developing the best AI models.
Mr Musk sued Mr Altman and others in August last year, claiming they violated contract provisions by putting profit ahead of the public good in the push to advance AI. In November, he asked a US district judge for a preliminary injunction blocking OpenAI from converting to a for-profit structure.
Mr Musk’s lawsuit against OpenAI and Mr Altman says the founders originally approached him to fund a nonprofit focused on developing AI to benefit humanity, but that it was now focused on making money.
“It’s time for OpenAI to return to the open-source, safety-focused force for good it once was,” Mr Musk said in a statement. “We will make sure that happens.”
Mr Musk and OpenAI backer Microsoft did not immediately respond to requests for comment.
“Musk’s bid puts another wrinkle into OpenAI’s quest to remove the nonprofit’s control over its for-profit entity,” said Rose Chan Loui, executive director of the UCLA Law Center for Philanthropy and Nonprofits.
“This bid sets a marker for the valuation of the nonprofit’s economic interests,” she said. “If OpenAI values the nonprofit’s interests at less than what Musk is offering, then they would have to show why.”
The consortium led by Mr Musk includes his AI startup xAI, Baron Capital Group, Emanuel Capital and others.
XAI could merge with OpenAI following a deal, according to the Wall Street Journal which first reported Mr Musk’s offer earlier. XAI recently raised $6 billion from investors at a valuation of $40bn, sources have told Reuters.
‘Throwing a wrench’
“This (bid) is definitely throwing a wrench in things,” said Jonathan Macey, a Yale Law School professor specialising in corporate governance.
“The nonprofit is supposed to take money to do whatever good deeds, and if OpenAI prefers to sell it to somebody else for less money, it’s a concern for protecting the interests of the beneficiaries of the not-for-profit,” he added.
OpenAI was valued at $157bn in its last funding round, cementing its status as one of the most valuable private companies in the world. SoftBank Group is in talks to lead a funding round of up to $40bn in OpenAI at a valuation of $300bn, including the new funds, Reuters reported in January.
Aside from any antitrust implications, a deal this size would need Mr Musk and his consortium to raise enormous funds.
Mr Musk’s stock in Tesla is valued at roughly $165bn, according to LSEG data, but his leverage with banks is likely to be thin after his $44bn buyout of what was then called Twitter in 2022.
To finance such a bid, Mr Musk could sell part of his stake in Tesla or take a loan against his stake, or use his stake in rocket company SpaceX that is worth tens of billions of dollars as collateral, according to an uninvolved investment banker, who requested anonymity.
“Musk’s offer to buy OpenAI’s nonprofit should significantly complicate OpenAI’s current fundraising and the process of converting into a for-profit corporation,” said Gil Luria, analyst at DA Davidson.
“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,” he added.
Taoiseach attends AI summit in Paris
Taoiseach Micheál Martin is attending the Artificial Intelligence summit in Paris which will be dominated by far-reaching discussions involving world leaders, tech corporations and non-governmental organisations about the risks and opportunities posed by the new frontiers of AI.
The meeting will be overshadowed by the new Trump administration’s links with billionaire tech owners, such as Mr Musk, and friction between the US and Europe over free speech and regulation of the tech sphere.
This AI gathering, hosted by President Emmanuel Macron, will be a highly charged affair, where breathtaking advances in computing collide with fraught geopolitics.
Additional reporting Tony Connelly
