Elon Musk’s recent post on X created chaos when he offered to buy OpenAI for $97 Billion. However, OpenAI CEO Sam Altman declined the offer, saying, “OpenAI is not for sale.” The feud between Altman and Musk is not new. Their rivalry is as old as OpenAI itself. Read the article to get details about the bid made by Musk, why he made it, and what the impact of this mayhem on OpenAI.
Introduction: The Battle Between OpenAI & Musk
Elon Musk is in the headlines with his bullish stance towards OpenAI. The tech billionaire put forth a $97.4 billion bid to acquire the nonprofit entity that controls OpenAI. However, the offer was rejected unanimously by OpenAI’s board. This rejection deepens the gap between Tesla owner Musk and Sam Altman. Despite the rejection, it is speculated that this move was in the interest of Elon Musk as he successfully complicated the transition of the non-profit OpenAI model to a for-company.
Musk’s $97.4 Billion Offer: What Was At Stake?
Musk has no explicit intention to buy the non-profit arm of OpenAI as long as he is involved in a legal battle with Altman. His bid was a strategic move to disrupt the company’s growth and hit its ambition of becoming a for-profit company. OpenAI operates under a unique structure where a nonprofit board holds legal control over its for-profit operations. This arrangement has allowed OpenAI to attract investments while committing to ethical AI development. However, OpenAI is looking for a valuation increase through a $40 billion funding round led by SoftBank, which could push its valuation to nearly $300 billion. Musk’s bid, which is significantly lower than the valuation, is aimed at disrupting the transition and giving Altman a hard time.
Why Did OpenAI Reject Musk’s Offer?
OpenAI CEO Sam Altman rejected the offer outright, even mocking Musk with a counterproposal to buy Twitter for $9.74 billion, a reference to Musk’s $44 billion Twitter acquisition. The OpenAI board rejected Musk’s bid, citing that it does not align with the company’s mission or future goals.
There are several reasons why OpenAI turned down Musk’s offer:
Ongoing Fundraising Efforts: OpenAI is in the middle of securing a $40 billion investment round.
Nonprofit Board Control: The board prioritizes OpenAI’s long-term vision over short-term financial gains.
Tensions with Musk: Given Musk’s history with OpenAI, his control could lead to major shifts in its direction.
The Long-Standing Feud: Musk Vs. Altman
Musk co-founded OpenAI in 2015, but by 2018, he left the organization after failing to take control of its direction. Musk wanted OpenAI to become part of Tesla and shift toward a for-profit model, but Altman and other board members opposed the idea. Since then, Musk has publicly criticized OpenAI, even suing the company, claiming it violated its nonprofit mandate by becoming a profit-driven enterprise.
Altman has responded to Musk’s attacks, calling him “insecure” and saying he should compete by “building a better product” rather than interfering with OpenAI.
OpenAI’s Complex Corporate Structure & Its Role In The Conflict
One of the biggest hurdles in OpenAI’s transition to a full-fledged for-profit entity is its unusual corporate structure. While OpenAI’s for-profit arm handles investments and operations, the nonprofit board retains full legal control. This setup was meant to ensure that AI development remains ethically aligned rather than purely profit-driven.
Musk’s $97.4 billion offer further complicates this structure. If OpenAI’s nonprofit board were to sell, it would set a precedent for its valuation, potentially increasing costs for its eventual transition. OpenAI has been exploring ways to buy out the nonprofit entity, but Musk’s bid sets a benchmark that makes this process even more difficult.
Is Musk Serious Or Just Playing Mind Games?
Experts speculate that Musk’s offer wasn’t a genuine acquisition attempt but rather a disruptive tactic. Musk has a history of creating friction for OpenAI, whether through lawsuits, public criticism, or now, an unsolicited buyout attempt.
Some analysts believe Musk’s real goal is to slow down OpenAI’s momentum while boosting his own AI company, xAI. By increasing OpenAI’s valuation, Musk makes it harder for the company to secure favorable investment terms. Additionally, his legal battles against OpenAI suggest he is committed to making the company’s nonprofit-to-profit transition as challenging as possible.
What’s Next For OpenAI & The AI Industry?
Despite Musk’s interference, OpenAI remains focused on its $40 billion funding round, pushing its valuation to $300 billion. Meanwhile, Musk’s AI startup, xAI, continues to develop alternatives to OpenAI’s ChatGPT, positioning itself as a direct competitor.
The broader AI industry is watching closely, as Musk’s legal battles against OpenAI could set a precedent for AI governance and the ethics of profit-driven AI development. If OpenAI successfully transitions into a fully for-profit company, it could reshape the future of AI as it will set an example of balancing ethics and commercial success.
Wrap Up
OpenAI’s rejection of Musk’s $97.4 billion bid marks another chapter in the ongoing rivalry between Elon Musk and Sam Altman. While OpenAI is moving forward with its fundraising and expansion, Musk continues to challenge the company’s legitimacy, structure, and mission. Given Musk’s vast resources and persistence, this feud is far from over.
