Elon Musk’s $97.4B Bid for OpenAI Sparks Controversy and Industry Shockwaves
Artificial intelligence is on its way to an advanced level day by day. Speaking of advanced, there can be none more audacious than Musk’s new initiative. He is making an incredulous $97.4 billion bid for OpenAI. This stirred up the tech industry with shock waves and the rest of the tech world is understandably confused, seeing as how OpenAI’s board states that it has not received a formal offer.
The feud between Elon Musk and OpenAI has taken another turn this week, as sources reveal the OpenAI board has yet to receive a formal takeover offer by the billionaire consortium. However, Musk’s lawyers assert that the offer was sent, and OpenAI stands firm that the nonprofit operating ChatGPT is not for sale.
The Bid:
The day after Musk publicly made his offer of $97.4 billion to buy OpenAI, doubts remained as to whether the board has even seen it or not. An anonymous source close to the situation alleged that OpenAI’s board has not received a formal offer, contradicting claims made by Musk’s attorney, Marc Toberoff. Toberoff asserts that a bid in the form of a four-page Letter of Intent was sent via email to OpenAI’s outside counsel at Wachtell, Lipton, Rosen & Katz. The law firm, however, has yet to confirm or deny receipt of the document. Toberoff said, “The bid – attached to an email – was in the form of a detailed four-page Letter of Intent to purchase OpenAI’s assets, signed by Musk and other investors and addressed to the board”. He further emphasized, referring to OpenAI’s CEO, “Whether Sam Altman chose to provide or withhold this from OpenAI’s other Board members is outside of our control”.
OpenAI CEO Sam Altman fiercely refuted Musk’s proposal. Addressing the audience at an AI summit in Paris, Altman dismissed the bid as “ridiculous,” arguing that OpenAI’s nonprofit side is not for sale. Altman said, referring to Musk, “The Company is not for sale. It’s another one of his tactics to try to mess with us”. This suggested that Musk’s bid was more for disruption than legitimate acquisition.
OpenAI’s Transformation:
Co-organized by Musk, OpenAI was inaugurated in 2015, a non-profit with the mission of being engaged in enlightened development of AI. Musk parted ways from the company because of disagreement over the vision and funding mechanisms. Since then, OpenAI has grown into one of the most prestigious destinations in AI, raising billions in its for-profit transformation.
OpenAI now finds itself in a maze of legal and regulatory cobwebs as it seeks to raise $40 billion while moving from the status of a non-profit to a capped-profit one. The attorney general of Delaware, Kathy Jennings, is looking into whether or not OpenAI’s transformation into a profit-oriented organization fits the aim for charitable operation it was designed for, thus preventing the current leadership from pursuing commercial objectives instead of benefitting the general public. She said, “I am reviewing OpenAI’s proposed changes to ensure the company is adhering to its specific charitable purposes for the benefit of the public beneficiaries, as opposed to the commercial or private interests of OpenAI’s directors or partners.”
Meanwhile, Musk’s startup is establishing its own AI project through promoting xAI as a competitor to OpenAI. The recent attempt to acquire OpenAI now throws a wrench into ongoing discussions on OpenAI’s valuation and fair market value for assets held by the nonprofit.
Challenges and Market Implications:
Legal experts remained certain that Musk’s offer would indirectly create an asset price for OpenAI’s nonprofit status. Robert Weissman, Co-President of consumer rights group, Public Citizen, pointed out that regulators would be obliged to ensure that any dismantling of these assets takes place at fair market value should OpenAI’s nonprofit entity decide to obtain control of the process. Weissman said, “It does help set a price point for the thinking about the valuation of the nonprofit assets. If it were to occur as proposed, the regulators have a duty to ensure that if there’s a selloff of assets to a for-profit entity, that fair market value is obtained.”
In the meantime, amidst the present volatility, OpenAI is put in a situation to get funding for financing and push AI research forward. Right now, Altman’s message to Musk is definitely no offers whatsoever for the purchase of OpenAI, regardless of whatever price it puts on the table.
Musk sees himself as the rightful steward of AI’s future, while OpenAI stands firm on independence and funding for future progress. Whether this standoff escalates into legal battles, under regulatory scrutiny, or with another surprising turn remains to be seen. One thing is for sure, the future of AI is equally about corporate power plays as technological breakthroughs.
Read More: OpenAI Hunts for U.S. Sites to Build Trump-Backed ‘Stargate’ AI Superhub
