Elon Musk Makes $97.4 Billion Offer to Acquire OpenAI
Elon Musk has once again positioned himself at the centre of the artificial intelligence world, this time by leading a group of investors in a $97.4 billion bid to acquire control of OpenAI. This unsolicited offer shakes the foundation of OpenAI’s existing plans to raise more funding, and raises questions about the future of one of the most prominent forces in artificial intelligence.
A Bold Move for Control
The consortium behind the offer, led by Mr Musk, includes prominent investors such as Vy Capital, Xai (Mr Musk’s own artificial intelligence company), and Hollywood power broker Ari Emanuel, along with other unnamed stakeholders. While the details are confidential, those familiar with the discussions confirm that the bid is directed at acquiring the assets of the nonprofit entity controlling OpenAI.
This move intensifies a long-standing rivalry between Elon Musk and OpenAI CEO Sam Altman. The bid represents Musk’s latest effort to take control of the organisation he once helped establish. A public exchange on X (formerly Twitter) between the two leaders highlights the tension, with Altman swiftly dismissing Musk’s offer with a joking remark and Musk replying curtly, “Swindler.”
How the Offer Complicates OpenAI’s Plans
OpenAI’s valuation and funding efforts were already making headlines. SoftBank, the Japanese conglomerate, has been leading a fresh round of financing aimed at raising $40 billion, placing OpenAI’s valuation at $300 billion. The completion of this funding round would make OpenAI one of the most valuable private companies in the world, alongside giants such as SpaceX and ByteDance.
Elon Musk’s offer, however, disrupts OpenAI’s efforts to secure funding and potentially strengthens the nonprofit’s position. Mr Altman and OpenAI executives have been exploring ways to sever the nonprofit’s control over the company. However, Musk’s bid could prompt OpenAI’s stakeholders to reassess the value of the nonprofit’s assets, potentially increasing the cost OpenAI’s for-profit arm would need to pay to achieve independence.
The nonprofit board that controls OpenAI consists of only two employees and holds roughly $22 million in assets. It retains legal control over OpenAI, making it a critical piece in Musk’s proposed acquisition. The board’s duty is to act in the nonprofit’s best interests, and external experts suggest the board would be obligated to consider Musk’s offer seriously.
Elon Musk and OpenAI’s History
OpenAI’s origins date back to 2015, when Elon Musk, Sam Altman, and other prominent figures in tech founded the organisation as a nonprofit. The goal was to freely share advanced AI technologies to benefit humanity. Musk left the organisation three years later following disagreements over its direction. Altman then shifted the company’s focus, creating a for-profit arm to attract significant investments required to fund cutting-edge AI technologies.
Since then, OpenAI’s corporate structure has evolved into a complex framework, combining nonprofit oversight with a for-profit entity focused on commercialising AI. Though highly unusual, this structure has allowed OpenAI to raise necessary funds while maintaining some adherence to its initial principles. However, this bifurcated structure now poses challenges, particularly as Altman seeks to complete the transition to a for-profit model.
Regulatory Scrutiny and Potential Complications
Even before Musk’s bid, OpenAI’s restructuring efforts were under scrutiny from regulators in Delaware and California. Moving the nonprofit-controlled assets to the for-profit entity requires careful evaluation to ensure the nonprofit receives fair compensation. Elon Musk’s $97.4 billion offer sets a benchmark that could complicate ongoing negotiations.
According to Ellen P. Aprill, a legal scholar focused on nonprofit regulations, the board’s decision-making process could be closely examined to verify that it considered the highest value for these assets. Failure to do so could attract further regulatory challenges.
A Broader Context of Influence and Rivalry
This high-stakes bid doesn’t occur in isolation. Elon Musk launched his own AI company, Xai, in 2023, aiming to rival OpenAI directly. While OpenAI has retained its lead in innovation, supported by substantial funding, Xai has worked steadily to catch up. Musk’s influence extends beyond the tech community. His close relationship with President Trump has carried significant weight in supporting other AI-related initiatives.
For instance, just days after President Trump’s inauguration, a $100 billion AI infrastructure project involving OpenAI, SoftBank, and Oracle gained governmental backing. Musk and Altman’s competition doesn’t just include technology—it spans business and politics as well.
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