A consortium led by billionaire Elon Musk has offered $97.4 bn for OpenAI, CHATGPT’s parent company, US media reported Wednesday. The stakes in Musk’s battle with Sam Altman over the company behind ChatGPT are rising as his xAI competes fiercely with OpenAI and other artificial intelligence companies. CNN CNN it as“A high-stakes bid that could reshape the future of AI”.
Musk, left, and Altmann, right. (visual China)
Altmann’s refusal
The Wall Street Journal reported that Musk’s lawyer said on Monday that he had submitted an offer to OpenAI’s board of nonprofit organization. “It’s time for OpenAI to return to security-focused open source authenticity forever, and we want to make sure that happens,” Elon Musk said in a statement
Altmann, OpenAI’s chief executive, immediately and publicly rejected the news. “No, but if you want, I can buy your social media platform for $9.74 billion,” he countered on Musk’s X platform, moving the decimal point of the billionaire’s offer for OpenAI one place to the left. In response to the news of the acquisition, “Our structure ensures that no individual has control over openai… These are strategies that are trying to undermine us because we are making tremendous progress,” Altmann wrote in an internal message to employees
The offer complicates Altmann’s elaborate plans for OpenAI’s future, including turning it into a for-profit company, it is investing up to $500 billion in AI infrastructure through a joint venture called Stargate. Last month, Musk attacked the OpenAI-led plan to build data centres in the US, despite being hailed as historic by President Donald Trump, in a rare move, Musk said the plan’s backers“Don’t really have the money.”.
The feud between two people
The fight over OpenAI’s earnings has been part of a long-running feud between Musk and Ultraman since the pair co-founded the company in 2015. In 2019, after Musk left the company and Altmann became chief executive, OpenAI created a for-profit subsidiary that became a vehicle for raising money from Microsoft and other investors.
Musk sued OpenAI last year, accusing it of being a“De facto closed-source subsidiary” of its investor, Microsoft, of betraying its original intention to conduct pro bono research and development, and filed another suit in November, asking the court to stop OpenAI from turning into a for-profit company. Elon Musk has invested about $45M in OpenAI between its inception and 2018, according to its lawyers.
In December, OpenAI announced a restructuring plan that would use a social enterprise model to better attract investment. OpenAI said at the time that its board was reviewing a plan to transform the company’s existing for-profit business into a Delaware social enterprise that would run OpenAI’s operations and operations. In the meantime, OpenAI’s non-profit division will continue to exist and will hold shares in social companies at reasonable valuations determined by independent financial advisers.
Lawyers for musk and OpenAI Data East , Inc. v. Epyx, Inc. in California Federal Court last week. US District Judge Rogers said at the time that musk had“Gone too far” in saying OpenAI would suffer“Irreparable harm” if it was not prevented from becoming a for-profit company. Earlier this year, Musk’s lawyers sent letters to officials in California, where OpenAI is headquartered, and Delaware, where OpenAI is registered, asking them to make an open bid for the company, to determine the fair market value of their charitable assets. Musk’s position has been clear, however, that in turning OpenAI into a for-profit company, it is likely to deliberately devalue its nonprofit organization to the detriment of the public good and to the benefit of capital. The Wall Street Journal believes a successful takeover of OpenAI by a musk-led group of investors could nonprofit organization a merger with Musk’s own XAI artificial intelligence unit.
To become a commercial enterprise, OpenAI’s for-profit arm must buy the assets of its controlling nonprofit organization at a fair price, according to Politico. But Musk’s bold bid is likely to raise the value of those assets, which means the for-profit sector may have to spend more, otherwise, the nonprofit organization will have to explain to regulators why it accepted the lower offer.
“The boldest offensive.”
Even before Musk’s latest move, OpenAI was under pressure for what the Wall Street Journal said would be one of the biggest-ever conversions from a charity to a for-profit company. Rival Meta wrote to California officials in December expressing its opposition to the plan. In addition, OpenAI is in talks with Microsoft and other stakeholders about how much equity they should take in the new company.
Recently, OpenAI has been aggressively pursuing capital raisings at ever-higher valuations. In a funding round completed in October, OpenAI was valued at $157bn. In the round, OpenAI committed to transforming the non-profit company by the end of the 2026. The Wall Street Journal revealed last month that OpenAI was in talks to raise a new round of funding that could value the company at $300bn.
The New York Times argues that Musk’s latest move will not only slow down OpenAI’s plans to transform itself into a for-profit company, but will also have a complex impact on OpenAI’s subsequent funding and valuation moves, perhaps Elon Musk’s“Boldest attack” on OpenAI.
According to the Wall Street Journal, Musk’s move will not only hurt OpenAI’s plans to transform itself into a for-profit company, but also affect the“Stargate” project in which Altmann is involved. OpenAI and softbank are each trying to raise billions of dollars for Stargate, but that effort could be made more difficult by the uncertainty over the company’s future raised by Musk’s bid.