Elon Musk’s Team Puts Forward Surprising $97 Billion Bid for OpenAI

A group of investors, spearheaded by Elon Musk, is proposing approximately $97.4 billion to purchase the nonprofit organisation that oversees OpenAI, intensifying the ongoing dispute with the artificial intelligence company Musk helped establish a decade ago.
Elon Musk, together with his AI company xAI and a coalition of investment firms, plans to take over the creator of ChatGPT. Their intention is to return the company to its initial purpose as a nonprofit research organisation dedicated to charitable work, according to Musk’s lawyer, Marc Toberoff.
OpenAI’s CEO Sam Altman swiftly turned down an unsolicited offer on Musk’s social media platform, X, responding with, “Thanks, but no thanks. We’re willing to buy Twitter for $9.74 billion if you’re interested.”
Musk acquired Twitter, now rebranded as X, for $44 billion in 2022.
Altman and Musk, who co-founded OpenAI in 2015 and later clashed over leadership, have been in an ongoing rivalry regarding the direction of the company since Musk stepped down from its board in 2018.
Elon Musk, an initial investor and former board member of OpenAI, filed a lawsuit against the company last year, first in a California state court and later in federal court. He claimed that OpenAI had abandoned its founding principles as a nonprofit research entity that aimed to develop safer, more advanced AI for the benefit of society. Musk had invested roughly $45 million in the company from its beginning until 2018, as stated by his lawyer, Toberoff.
The sudden rise of ChatGPT two years ago brought OpenAI global recognition and new revenue opportunities, but it also fueled internal disputes about the organisation’s future direction and its efforts to build cutting-edge AI. In late 2023, OpenAI’s nonprofit board removed CEO Sam Altman, but he returned shortly afterward with a new board backing him.
Now a rapidly expanding company still overseen by a nonprofit board dedicated to its original mission, OpenAI announced plans last year to restructure its corporate setup. However, making such changes is challenging, as tax regulations require donations or assets given to a tax-exempt entity to remain within the charitable sector.
If a nonprofit organisation transitions into a for-profit entity, it typically requires a conversion process where the for-profit company compensates a charitable organisation at fair market value for its assets. Even if OpenAI, as a nonprofit, continues to operate in some capacity, some experts contend that it would still need to receive fair market value for any assets transferred to its for-profit subsidiaries.
Last week, attorneys representing OpenAI and Elon Musk appeared before a federal court in California, where a judge considered Musk’s request for a court order to prevent the company behind ChatGPT from converting into a for-profit organisation.
U.S. District Judge Yvonne Gonzalez Rogers has not yet ruled on Musk’s request but noted in court that it was a “stretch” for Musk to claim he would suffer irreparable harm if she doesn’t intervene to prevent OpenAI from moving forward with its planned transition. However, the judge also voiced concerns about OpenAI’s relationship with its business partner Microsoft and stated that she wouldn’t stop the case from proceeding to trial next year so a jury could make the decision.
“It is plausible that what Mr. Musk is saying is true. We’ll find out. He’ll sit on the stand,” she said.
In addition to Musk and xAI, other backers of the bid announced on Monday include Baron Capital Group, Valor Management, Atreides Management, Vy Fund, Emanuel Capital Management, and Eight Partners VC.
Toberoff said in a statement that if Altman and OpenAI’s current board “are intent on becoming a fully for-profit corporation, it is vital that the charity be fairly compensated for what its leadership is taking away from it: control over the most transformative technology of our time.”
Musk’s lawyer also provided a letter he sent in early January to the attorneys general of California, where OpenAI operates, and Delaware, where it is registered. The letter stated that both state offices must “guarantee that any transaction involving OpenAI’s charitable assets delivers at least fair market value to protect the public’s interest.” He continued, “We trust you will implement a competitive bidding process to assess that fair market value,” and asked for further details on the terms and timing of the process.
The conflict between Elon Musk and OpenAI has reached a critical point, with Musk leading a $97.4 billion proposal to take control of the company. His aim is to restore OpenAI to its original nonprofit mission, which is becoming increasingly controversial as the organization shifts towards a more profit-driven model. The legal dispute, driven by Musk’s concerns that OpenAI has strayed from its founding goals, underscores the challenge of reconciling charitable intentions with the potential for financial gain. As the case continues in court, the future direction of OpenAI and its role in the development of artificial intelligence will be shaped by the outcome of this high-stakes battle.