Why Musk may want to control OpenAI
Tech billionaire Elon Musk’s bid to take control of OpenAI is fanning the flames of a longtime feud with co-founder and CEO Sam Altman and complicating the path forward for the popular ChatGPT-maker.
Whether Musk has a real desire to run OpenAI or get ahead of a competitor, observers agree the bid is likely to slow down the artificial intelligence (AI) firm’s plans to change its corporate structure.
Musk, an original co-founder of OpenAI, has taken great issue with the company’s for-profit ambitions, so his bid to throw a wrench in their plans was not a surprise for some in the industry.
“The only way to stop OpenAI is [by] making their life, their fundraising more complicated,” said Lutz Finger, the founder of generative AI eCommerce company R2Decide and data scientist in residence at Cornell’s Johnson Graduate School of Management.
A consortium of investors led by Musk submitted a $97.4 billion bid to buy the assets of the nonprofit that controls OpenAI earlier this week. Altman quickly pushed back, stating OpenAI is “not for sale.”
OpenAI’s board of directors unanimously rejected Musk’s bid, OpenAI chairman Bret Taylor said in a post on X on Friday afternoon.
"OpenAI is not for sale, and the board has unanimously rejected Mr. Musk's latest attempt to disrupt his competition,” Taylor said. “Any potential reorganization of OpenAI will strengthen our nonprofit and its mission to ensure AGI [artificial general intelligence] benefits all of humanity.”
Musk has not explicitly stated his intentions behind going after OpenAI, but in a statement shared with The Hill said it is “time for OpenAI to return to the open-source, safety focused force for good it once was.”
His philosophy about the company’s direction after his 2018 departure is the driving force behind an ongoing suit against Altman and OpenAI. The suit alleges the company strayed from its roots to pursue profits over benefiting the public good.
While Musk says he wants OpenAI to focus on safety and open-source AI models, various technology observers suggested there is more to the picture.
The bid’s timing comes just days after reports circulated that SoftBank was close to finalizing a $40 billion deal with OpenAI that would bring the ChatGPT maker to a $300 billion valuation, nearly double its current value.
OpenAI was last valued at $157 billion, which includes assets from its non-profit and for-profit arms.
By submitting an unsolicited bid for the non-profit arm of OpenAI, Musk is informally setting a floor value that may be far higher than the valuation of the nonprofit’s subsidiaries.
“Now, when they [OpenAI] want to split up the for-profit and nonprofit, the state will come and ask, how much is the nonprofit worth and how much is the other profit worth?” Finger explained. “And by putting up this evaluation, Musk makes investing in OpenAI expensive.”
In a court filing Wednesday, Musk’s lawyer said the group would withdraw the bid if OpenAI halts its plans to restructure.
After a years-long shift away from its foundation as a nonprofit research lab, OpenAI announced its goal to restructure the company last year.
Under the current structure, OpenAI’s non-profit arm controls its for-profit business.
OpenAI said in December it planned to restructure the for-profit arm as a public benefit corporation (PBC) to give investors more control, but the non-profit would not be eliminated.
In explaining the shift, OpenAI officials said they realized they needed to “raise more capital than we’d imagined.”
Altman tried to clarify OpenAI’s status this week, telling Bloomberg, OpenAI is “not moving to a for-profit model” and said “we’re not sure we’re going to do it at all.”
“No matter what, the nonprofit will continue to be extremely important, it will drive the mission,” he said. “It will continue to exist. The board is looking at lots of options about how to best structure for this next phase, but the nonprofit is not changing in anything or going anywhere.”
But even if Musk goes back on the offer, as mentioned in a court filing, the number could still influence future fundraising talks.
“I do think it muddies the waters for OpenAI in terms of complicating the fundraising process,” Wedbush Securities analyst Dan Ives told The Hill.
“Once the bid is received, they [the board] has a fiduciary responsibility to look at the bid, consider it. It elongates the ability for fundraising. In other words, it complicates the current structure,” he said, adding, “The board, as a fiduciary, would have to potentially look if there’s other bidders for the company and what that could ultimately entail.”
Taylor, OpenAI’s board chair, called the offer “largely a distraction.”
Working as a nonprofit board, Taylor said on Wednesday, “our job is very simple.”
“Which is to basically evaluate every strategic decision of the organization through that one test, which is, ‘Does this actually further the mission of ensuring AGI benefits humanity?’ And I have a hard time seeing how this would.”
Taylor was the chairman of Twitter’s board when Musk made a bid for the social media company in 2022. [X]AI was one of the backers of the consortium bid.
Some were quick to brush off Musk’s bid as unserious, much like some did when he first suggested taking over Twitter, the social media platform now called X under his leadership.
When pressed over whether this is Musk déjà vu, Wedbush Securities analyst Dan Ives said, “This is apples to oranges” and that unlike now, he believed Musk was serious from the onset of the Twitter talks.
And with “the bad blood between Musk and Altman” Ives called Musk’s offer “somewhere between a bid and a stunt to slow down OpenAI.”
Musk may also have an interest in OpenAI given the ChatGPT maker’s dominance in the AI field as his own firm, xAI, fails to gain as much traction, observers suggested.
“Musk missed, somewhat, the AI train. Grok [by xAI] is a terrible chatbot. xAI has not delivered anything groundbreaking, so Musk is just behind,” Finger said, while noting it would be a “huge risk” for the Tesla CEO as OpenAI still faces threats from other competitors like Salesforce and DeepSeek, a relatively new Chinese AI startup.
Tensions between Altman and Musk have continued to rise as the two tech giants race to the development of artificial general intelligence, which refers to the concept that machines will be just as smart as humans.
OpenAI is one of the initial investors for President Trump’s Stargate venture, which commits $500 billion over the next four years to build AI infrastructure.
Musk, who is leading Trump's Department of Government Efficiency (DOGE) to slash federal bureaucracy, quickly poured cold water over the venture, claiming OpenAI and the other investors do not have the money as promised.
This led to a back-and-forth between Musk and Altman, during which Musk fired off a series of posts slamming OpenAI’s restructuring plans.
Ives suggested the Stargate venture “definitely put gasoline on the fire a bit.”
The Hill reached out to OpenAI and Musk's legal team for further comment.
Topics
-
Behind Elon Musk’s Hostile Bid for Control of OpenAI
The tech mogul is unlikely to win. But his goal may be more about making life difficult for the A.I. start-up and its leader, Sam Altman.The New York Times - Feb. 11 -
Elon Musk-led investor group offers $97.4 billion for control of OpenAI
Billionaire Elon Musk is leading a group of investors in a $97.4 billion bid to take control of artificial intelligence pioneer OpenAI.CBS News - Feb. 10 -
Elon Musk and investors offering $97.4 billion for control of OpenAI, WSJ reports
Elon Musk is leading a group of investors in offering to buy control of OpenAI for $97.4 billion, The Wall Street Journal reported on Monday.NBC News - Feb. 10 -
Elon Musk Leads $97.4 Billion Bid to Control OpenAI
The billionaire is leading a group of investors in the unsolicited offer, which complicates the start-up’s plan to raise more money.The New York Times - Feb. 11 -
Elon Musk-led consortium offers $100bn to take control of OpenAI
Bid complicates chief Sam Altman’s plans to turn artificial intelligence group into for-profit companyFinancial Times - Feb. 11 -
OpenAI Questions Rationale of Elon Musk’s Bid to Control the Company
The company answered the billionaire’s offer in a legal filing, accusing him of hypocrisy.The New York Times - 6d -
OpenAI Rejects Elon Musk’s $97.4 Billion Bid for Control of the Company
Bret Taylor, the chairman of OpenAI’s board, said the artificial intelligence company was “not for sale.” Mr. Musk is separately raising money for his A.I. start-up, xAI.The New York Times - 4d -
Sam Altman says 'no thank you' to Musk-led group's bid for control of OpenAI
OpenAI CEO and co-founder Sam Altman appeared to shut down a reported offer from an investor group led by Elon Musk to buy the nonprofit that controls OpenAI, marking the latest back-and-forth ...The Hill - Feb. 10 -
Musk-Led Group Makes $97.4 Billion Bid for Control of OpenAI, WSJ Reports
In response to the news, OpenAI CEO Sam Altman wrote: ‘no thank you but we will buy twitter for $9.74 billion if you want’.Inc. - Feb. 10
More from The Hill
-
4 takeaways from the Trump, Elon Musk interview
President Trump and tech billionaire Elon Musk sat down for a joint interview with Fox News’ Sean Hannity where they defended the administration’s massive overhaul of the federal government and ...The Hill - 1h -
Trump says he's ordered firing of all remaining 'Biden-era' US attorneys
President Trump said that he has directed the Department of Justice (DOJ) to fire all remaining former President “Biden-era” U.S. attorneys, claiming the department “has been politicized like never ...The Hill - 2h -
Kamala Harris signs on with Hollywood talent agency
Former Vice President Harris is making one of her first post-2024 White House bid moves, signing with Creative Artists Agency (CAA). The talent agency will represent Harris "in all areas, focusing ...The Hill - 3h -
NYT's Bret Stephens slams Vance's Munich message as a 'disgrace'
Bret Stephens, a conservative New York Times columnist, called Vice President Vance’s speech at the Munich Security Conference last week a “disgrace” and criticized Vance for meeting with the ...The Hill - 3h -
Live updates: Trump, Musk sit for joint interview; Senate GOP will take up budget resolution
President Trump and Elon Musk are sitting for a joint interview on Fox News Tuesday night where they are addressing their working relationship and how they came to know each other. The interview is ...The Hill - 3h
More in Politics
-
4 takeaways from the Trump, Elon Musk interview
President Trump and tech billionaire Elon Musk sat down for a joint interview with Fox News’ Sean Hannity where they defended the administration’s massive overhaul of the federal government and ...The Hill - 1h -
Trump says he's ordered firing of all remaining 'Biden-era' US attorneys
President Trump said that he has directed the Department of Justice (DOJ) to fire all remaining former President “Biden-era” U.S. attorneys, claiming the department “has been politicized like never ...The Hill - 2h -
Kamala Harris signs on with Hollywood talent agency
Former Vice President Harris is making one of her first post-2024 White House bid moves, signing with Creative Artists Agency (CAA). The talent agency will represent Harris "in all areas, focusing ...The Hill - 3h -
NYT's Bret Stephens slams Vance's Munich message as a 'disgrace'
Bret Stephens, a conservative New York Times columnist, called Vice President Vance’s speech at the Munich Security Conference last week a “disgrace” and criticized Vance for meeting with the ...The Hill - 3h -
Live updates: Trump, Musk sit for joint interview; Senate GOP will take up budget resolution
President Trump and Elon Musk are sitting for a joint interview on Fox News Tuesday night where they are addressing their working relationship and how they came to know each other. The interview is ...The Hill - 3h