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For most startups, a buyout offer nearing $100bn is something to be celebrated. But OpenAI is not like other startups—and Elon Musk is not like other acquirers.
On February 11th a consortium led by the world’s richest man made an unsolicited $97bn bid for the assets of the non-profit entity that controls OpenAI, the world’s leading developer of artificial-intelligence (AI) models. Mr Musk, who helped found the firm, is in an escalating feud with Sam Altman, OpenAI’s boss, over its transition to a more orthodox, profit-seeking corporate structure, which Mr Musk claims would be a betrayal of its original safety-first mission. In reality, Mr Musk is determined to hobble the biggest competitor to xAI, a rival company he launched in 2023—and seems willing to use whatever means he can to do so.
Mr Musk’s offer is best understood as a spoiler. OpenAI is raising ever larger sums of money to fund the vast amount of computing power it needs to make advanced AI. To do that, it has promised outside investors, of which Microsoft, a tech giant, is the biggest, that they will get equity stakes in a for-profit firm, rather than the murky ownership fudge that currently exists. Negotiations are under way to determine what share of that new company the non-profit receives in return for ceding control over the current arrangement.
OpenAI swiftly rejected the outside bid. On X, Mr Musk’s social network, Mr Altman posted a facetious counter-offer: $9.7bn to “buy Twitter”, as the site was once called. “OpenAI is not for sale,” insists Chris Lehane, the firm’s spokesman. That apparently reflects the position of the non-profit’s board. Jill Horwitz, professor of law at the University of California, Los Angeles, says the board’s fiduciary duty is to act in line with OpenAI’s legal purpose, which is to build superhuman intelligence that is “safe and benefits all of humanity”. That may give it more wriggle room to deflect the offer.
Mr Musk’s target audience, though, may not be the board. More likely he is seeking to ratchet up pressure on the attorneys-general of California and Delaware, where OpenAI is located and registered. His lawyers have urged them to scrutinise the change in OpenAI’s ownership structure to ensure the charity surrenders control at fair-market value, and threatens a bidding war if they do not. Insiders at OpenAI think it absurd that the officials in the two Democrat-governed states will bow to the will of Mr Musk, a prominent ally of President Donald Trump. But as Ms Horwitz puts it, they have “clear law to apply”.
It is therefore possible that, even if Mr Musk’s chances of gaining control of OpenAI are slim, his bid will complicate its future. It will be more difficult to justify valuing the non-profit’s assets at less than $97bn if there is a concrete offer for that sum. But such a figure will mean that a smaller share of the equity in the new for-profit company will be left for outside investors. OpenAI is reportedly in the process of raising some $40bn from investors including SoftBank, a Japanese tech conglomerate. Mr Musk may be hoping to derail those efforts.
The bid follows acrimony over Mr Altman’s announcement, together with Mr Trump, of the “Stargate Project” on January 21st, a fund of $100bn backed by OpenAI and SoftBank, among others, and intended to invest in data centres in America. Mr Musk, who was reportedly kept in the dark, was quick to argue that the backers didn’t have the money (something they have denied).
“I think he’s just trying to slow us down,” Mr Altman said on February 11th. “I feel for the guy. I don’t think he’s a happy person.” In fact, Mr Musk is never happier than when he is in the thick of a fight.
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