Musk’s $97.4 Billion Bid to Buy OpenAI Nonprofit
A consortium led by Elon Musk has offered $97.4 billion to buy the nonprofit that controls OpenAI, in a move that is likely to escalate tensions with OpenAI CEO Sam Altman over the future of the company.
Background
Musk co-founded OpenAI with Altman in 2015 as a nonprofit, but left before the company took off. He founded the competing AI startup xAI in 2023. Musk, the CEO of Tesla and owner of tech and social media company X, is a close ally of President Donald Trump and has spent over a quarter of a billion dollars to help elect him. He is also the leader of the Department of Government Efficiency, a new arm of the White House tasked with radically shrinking the federal bureaucracy.
The Bid
Musk’s bid is likely to ratchet up longstanding tensions with OpenAI over the future of the company, which is at the heart of a boom in generative AI technology. Altman promptly responded to the offer by posting on X: "no thank you but we will buy Twitter for $9.74 billion if you want."
Musk’s Lawsuit
Musk sued 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 U.S. district judge for a preliminary injunction blocking OpenAI from converting to a for-profit structure.
The Consortium
The consortium led by 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 Musk’s offer earlier on Monday. XAI recently raised $6 billion from investors at a valuation of $40 billion, sources have told Reuters.
Reactions
"This bid is definitely throwing a wrench in things," said Jonathan Macey, a Yale Law School professor specializing 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."
Implications
Aside from any antitrust implications, a deal this size would need Musk and his consortium to raise enormous funds. Musk’s stock in Tesla is valued at roughly $165 billion, according to LSEG data, but his leverage with banks is likely to be thin after his $44 billion buyout of what was then called Twitter in 2022.
Conclusion
Musk’s offer to buy OpenAI’s nonprofit is likely to complicate OpenAI’s current fundraising efforts and the process of converting into a for-profit corporation. The offer sets a marker for the valuation of the nonprofit’s economic interests, and OpenAI would need to show why it values its interests at less than what Musk is offering.
Frequently Asked Questions
- What is the current valuation of OpenAI?
OpenAI was valued at $157 billion in its last funding round, cementing its status as one of the most valuable private companies in the world. - What is the proposed deal worth?
The deal is worth $97.4 billion. - Who is part of the consortium led by Elon Musk?
The consortium includes his AI startup xAI, Baron Capital Group, Emanuel Capital, and others. - What is the next step for OpenAI?
OpenAI will need to decide whether to accept the offer or pursue other funding options.